Idea Snapshots: Golar LNG, Applied Materials, Nu Holdings, ZIM Shipping, EOG Resources, and More
Post-Earnings Updates and Quick Idea Theses
In this article we highlight a few ideas that might be of interest to value-oriented investors. We focus on businesses where a credible valuation case can be made for the shares. We avoid companies where market optimism has already pushed the shares to such heights that prospective investment returns seem likely to disappoint.
For each of the following companies, we provide an up-to-date investment snapshot, reflecting the company’s latest earnings report.
Golar LNG (GLNG) is a de-risked pure-play on floating LNG infrastructure whose valuation, with a market cap of ~$4.2 billion, fails to reflect its recently secured $17 billion contracted EBITDA backlog.
Applied Materials (AMAT): As a “picks and shovels” leader for the AI era, AMAT’s valuation does not capture its long-term earnings power, trading at a forward P/E ratio of ~19x, a discount to peers.
Nu Holdings (NU) is a dominant fintech platform mispriced as a traditional bank; its forward P/E ratio of ~25x is inexpensive for a business with a large, under-monetized customer base and 28% ROE.
ZIM Integrated Shipping Services (ZIM) is a shipper whose shares trade at 0.45x tangible book value, offering a significant margin of safety.
Smithfield Foods (SFD) is a vertically integrated food producer whose defensive characteristics are underappreciated by the market.
EOG Resources (EOG) is a low-cost oil and gas producer whose valuation, at an ~8% FCF yield, fails to reflect its deep inventory of high-return wells and fortress balance sheet.
Banco BBVA Argentina (BBAR) is a well-capitalized, share-gaining bank leveraged to Argentine recovery, trading at a price-to-book ratio of ~1.2x, reflecting macro pessimism rather than franchise strength.
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Tom Russo, Managing Member of Gardner Russo & Quinn
Will Thomson, Managing Partner of Massif Capital
Christopher Tsai, President of Tsai Capital Corporation
Ed Wachenheim III, Chairman of Greenhaven Associates
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Let’s find out why the following ideas may be worth a closer look.
Golar LNG (Nasdaq: GLNG)
A de-risked pure-play on floating LNG infrastructure. Golar LNG is a high-quality operator of critical energy infrastructure at a valuation that fails to reflect its recently secured, multi-decade cash flow stream. With its entire Floating Liquefied Natural Gas (FLNG) fleet now contracted for 20 years, Golar offers unparalleled visibility into future earnings and FCF generation, underpinned by a management team demonstrating both operational excellence and shareholder-friendly capital allocation.
A transformational quarter has de-risked the business model. The company recently locked in its long-term future by securing 20-year charters for its entire FLNG fleet, adding a massive $13.7 billion to its contracted EBITDA backlog, which now stands at $17 billion. This backlog provides visibility and is further enhanced by the commencement of a 20-year contract for the FLNG Gimi vessel, which reached its commercial operations date in mid-June. Concurrent with these commercial milestones, the company fortified its balance sheet through a $575 million convertible bond issuance, opportunistically using a portion of the proceeds to repurchase 2.5 million shares while increasing its cash position to nearly $900 million.
The company now operates with utility-like cash flow visibility. The recent contracting success has transformed Golar from a company with project and re-contracting risk into a stable infrastructure asset with a $17 billion contracted EBITDA backlog extending for two decades. This long-duration, high-quality revenue stream significantly reduces earnings volatility and insulates the company from the cyclicality of the LNG shipping market. Furthermore, the contracts are structured to provide significant upside potential, with an estimated $100 million in additional annual cash flow for every dollar the offtake price exceeds $8/MMBtu, offering investors a free call option on higher energy prices without the associated downside risk.
Golar's technological leadership and operational prowess create a durable competitive advantage. The company is not merely a vessel owner but a pioneer and leading operator in the complex field of floating liquefaction. Its flagship vessel, the FLNG Hilli, has maintained a perfect 100% economic uptime since commencing operations in 2018, a testament to the company's technical expertise and execution capabilities. This proven track record, combined with proprietary designs that enable faster and more cost-effective project delivery compared to land-based alternatives, establishes a high barrier to entry and positions Golar as the partner of choice for monetizing offshore gas reserves.
Management is executing a shareholder-friendly capital allocation strategy. With its existing fleet fully contracted, the company is now pivoting to return significant capital to shareholders while prudently funding future growth. The recent declaration of a $0.25 quarterly dividend and the opportunistic repurchase of 2.5 million shares underscore this commitment. Furthermore, the recent $575 million convertible bond issuance at an attractive 2.75% coupon demonstrates astute financial management, securing long-term capital that provides the flexibility to fund the next generation of FLNG units from financing proceeds, backed by the strength of its multi-billion dollar backlog.
The primary long-term risk is concentrated counterparty and sovereign exposure. If this investment were to underperform over the next five years, it would most likely be due to the failure of its key counterparty, Southern Energy, to meet its 20-year obligations for the Hilli and Mark II FLNG units. While the contracts are definitive, they are concentrated with a single entity in Argentina, exposing Golar to the risks of that country. A deterioration in Argentina's economic stability or an adverse change in its energy policy could impair the counterparty's ability to perform, jeopardizing the long-term cash flows that form the foundation of the investment thesis.
The market capitalization fails to reflect the magnitude of the de-risked, contracted cash flows. With a market capitalization of approximately $4.2 billion, Golar trades at a fraction of its $17 billion contracted EBITDA backlog. The FLNG Gimi and Hilli vessels alone are contracted to generate a combined ~$436 million in annual adjusted EBITDA, providing a clear line of sight to a dramatic increase in cash generation as the new contracts commence. Analyst price targets average between $46.50 and $51.50, implying a significant upside from the current share price. Given the 20-year visibility and utility-like nature of the company's contracted cash flows, the shares appear materially undervalued on a discounted cash flow basis.
Resources for further research:
Applied Materials (Nasdaq: AMAT)
Applied Materials represents a "picks and shovels" investment on the secular growth of artificial intelligence and high-performance computing. As the leading provider of semiconductor manufacturing equipment, the company possesses a wide economic moat built on decades of materials engineering expertise, a vast intellectual property portfolio, and deep, collaborative relationships with every major chipmaker in the world. While the stock has performed well, its current valuation does not fully capture the long-term earnings power stemming from major technology inflections like Gate-All-Around transistors and High-Bandwidth Memory, which are essential for the AI era and structurally increase the capital intensity of the industry. Under the seasoned leadership of CEO Gary Dickerson, Applied is uniquely positioned to enable and profit from the foundational technology shifts that will define the next decade of computing.
The company's latest quarterly results showcased its record-breaking performance, directly fueled by the ongoing AI investment supercycle. For its third fiscal quarter, Applied delivered revenue of $7.3 billion and non-GAAP EPS of $2.48, representing year-over-year growth of 8% and 17%, respectively. Management explicitly attributed this strength to the "global race for AI leadership," which is driving massive R&D and infrastructure investments from its customers. However, the company also signaled a more cautious near-term outlook, guiding for a sequential revenue decline in the fourth quarter due to a digestion of recent capacity additions in China and the lumpy nature of leading-edge fab buildouts, highlighting the dynamic environment it is currently navigating.
The core of the investment thesis is AMAT's indispensable role in enabling the AI hardware roadmap. The computational demands of AI are forcing a series of fundamental changes in how chips are made, moving from simple 2D scaling to complex 3D architectures. Applied's expertise in materials engineering is critical for these transitions, such as the move to Gate-All-Around (GAA) transistors in logic and the adoption of High-Bandwidth Memory (HBM) for AI accelerators. These inflections are more materials-intensive, increasing the size of Applied's opportunity per wafer start by approximately 30% for GAA alone. The company is a dominant player in the advanced packaging technologies required for HBM, with a market share exceeding 50%, and expects this business to more than double to over $3 billion in the coming years.
AMAT's market leadership is fortified by its scale, technology portfolio, and R&D capabilities. The company is on track for its sixth consecutive year of revenue growth, a testament to its strong execution and strategic positioning. It holds leading market share across numerous product categories and is poised to gain further share in next-generation technologies like advanced DRAM, where it sees opportunities to capture five points of incremental share with the adoption of vertical transistor architectures. This technological dominance translates into superior financial performance, including robust gross margins of nearly 49% and significant FCF generation, which reached $2.05 billion in the most recent quarter.
The company's financial position allows for consistent and significant capital returns to shareholders while simultaneously funding future growth. AMAT maintains a disciplined capital allocation strategy, returning substantial cash to investors through a growing dividend and consistent share repurchases. At the same time, it is making investments to secure its long-term leadership, including over $200 million to strengthen the domestic chip supply chain in the U.S. and operating one of the world's most advanced wafer-level packaging labs in Singapore.
The most significant long-term investment risk is the inherent cyclicality of the semiconductor industry, which is now amplified by geopolitical tensions. While secular trends like AI provide a powerful tailwind, the industry remains subject to periods of over- and under-supply, which can lead to sharp swings in customer capital expenditures. A severe global recession or a significant slowdown in AI investment could lead to a downturn that would materially impact Applied's results. Furthermore, escalating trade restrictions, particularly related to China, could limit the company's addressable market and disrupt its global supply chain, a risk management explicitly highlighted in its near-term outlook.
Applied Materials trades at a reasonable valuation given its quality and growth prospects. A DCF analysis suggests a fair value in the range of $158 to $169 per share, indicating the stock is trading near its intrinsic value. On a relative basis, its forward P/E ratio of ~19x represents a discount to both its peer group and the broader semiconductor industry average. The consensus 12-month analyst price target sits near $196, implying over 20% upside from current levels. Combined with a dividend yield of over 1.1%, the valuation provides an attractive entry point for long-term investors seeking to gain exposure to the foundational layer of the AI revolution.
Resources for further research:
Nu Holdings (NYSE: NU)
Nu Holdings is a founder-led, technology-driven platform that is systematically dismantling the inefficient incumbent banking oligopoly in Latin America. The company possesses a formidable and widening competitive moat built on a virtuous cycle of structural cost advantages, a superior customer experience, and proprietary data analytics. The market currently misprices Nu as a high-multiple bank, failing to properly value its intangible assets—brand, technology, and a massive, under-monetized customer base—creating a significant dislocation between its market price and long-term intrinsic value.
The most recent operational results underscore the momentum of the business model. The platform expanded to nearly 123 million customers globally after adding another 4.1 million in the quarter, driving record revenue of $3.7 billion, a 40% year-over-year increase on a currency-neutral basis. This impressive top-line growth is translating directly into powerful operating leverage and profitability, with net income surging 42% year-over-year to $637 million and generating a highly attractive annualized return on equity of 28%. Critically, monetization is accelerating, with monthly average revenue per active customer (ARPAC) surpassing $12 for the first time, while the leading indicator of asset quality improved, suggesting disciplined underwriting amid rapid expansion.