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so this is kind of interesting i think nvidia of all companies might just be one of the best inflation proof stocks in the market right now i'm not even kidding you now a few months ago i said this is a 200 stock i got out after writing from 130 to 200 but now i think i was wrong looking deep into this company i completely missed the real growth engines of nvidia and looking at the company right now i think i was really mistaken about how good it is i think that the main growth engines for this company which i completely missed in my initial analysis just a few months ago are not really the consumer business i think the growth engines are coming from elsewhere ai cloud computing autonomous driving e-commerce the whole remote business these are the real strengths of this company especially in inflationary times now here's the thing they have every single thing you can think of that's really good for inflation they have pricing power they're pretty much monopolizing the market at this point their cash flow is insanely phenomenal as i'm about to show you their cash to date ratio is really good and their scalability is scary i mean they can scale without spending a lot on capex it's really kind of insanely terrifying for their competitors my mistake was focusing on the consumer business i'm not going to make the same mistake again and i think i might be loading up on a lot of nvidia to prep myself for inflation but then again you know this is just my opinion might be inaccurate might be wrong might be the ramblings of a madman go right ahead pull back a chair let's do this so the first thing we got to take a look at is the dcf right here i have my ebitda growth for the next five years as you can see i have it at 50 growth per year now we do have to say rest in peace to the 28 corporate tax which improves our dcf quite significantly and as you can see right here only three billion dollars in topics i don't know how this company gets so much cash flow so much margin with so little capex investments but check me on this and you'll see this is quite terrifying and again this is one of the strong suits for inflation that i just mentioned at 10 discount rate which is still quite significantly higher than any interest rate as we can see in the near future just to be in the conservative side a four percent long-term growth rate and 18 multiplier by the way this was my mistake in the first dcf that i did i think i used a 12.
this is definitely way more technology and innovative company rather than a manufacturer of you know hardware so it's definitely not 12. i don't think it's yet 25 but it's definitely should be priced at 18. and giving all that we have a 331 dollars and a half for perpetual approach 388 dollars for the ebitda approach and a total average of 365 dollars compared to the current 296 dollars we have a 23.3 upside for nvidia and i think that's not even considering the arm deal or inflationary impacts that's just nvidia being nvidia i think we have a bigger upside but let's look at it when we hit 365.
and looking at tip ranks you can see the consensus is quite the same 360 that's what we have from wall street analysts right now i swear to god i didn't look at this before i did my dcf but it's kind of reassuring to know that they're thinking the same thing that i am we have a high number of analysts right here and an average upside at 22 and a half percent the highest we have currently 400 and the average is 360.
lowest is 285 which is pretty much just ten dollars below the current price i can show you some of these but you'll see that they're all pretty much the same so based on only five star analysts as you can see which is what i started right here nobody's giving it a sale everybody's giving it upside not a single analyst on this list is giving us a cell we can go individually into these five star analysts but they're all quite qualified and you'll see that everybody sees the thing that i missed in my valuation just a few months ago and i'm honest enough to admit that i made a huge mistake but now i'm here to set the things straight now as you can see nobody is shorting the stock point nine four percent less than one percent of smart money is shorting the stock rightfully so it doesn't make any sense to short it but let's see how overvalued it actually is which i don't think it is check this out and here's the two metrics that matter that actually are not being told to you ev sales and price to sales how much this company is generating cash flow versus how much it's trading for so ev sales is 26.98 price to sales is 27.56 so under 30 on both now it's not a cheap company but under 34 ev sales and price to sales seems to be right in the realm of palantiy right now at 20 so even though you can't really say that nvidia is a cheap company it's definitely not overvalued look it's a company that generated 24.2 billion in sales in the past 12 months if you just go back five years they had five they went from five to twenty four point two that's almost a 5x growth in revenues in five years but what you're seeing on the screen right now is even more impressive their growth of operating income went even higher while the business grew 5x the operating income grew from 800 to 8 billion 10x almost 10x so from 5x revenue they generated 10x operating income that's insanely efficient and again another strong suit for inflation prep look at this they have 19.3 billion in total cash now 19.3 billion now look at the debt the debt is 11.8 which means we have over 7 billion of extra cash versus debt which they can repay today but there's no reason just cheap interest once the interest rate goes up once inflation hits they can easily erase this debt and still have 7 billion of cash on hand which shows me they're definitely prepared for inflation and looking at the balance sheet look at this 40.6 billion assets now they do have some goodwill here which is about four so let's say it's 36 right 36 billion in assets 16.8 let's say 17 in liabilities so more than 2x assets versus liabilities this company is prepped prepared it's as pristine as my grandpa's bed the new is morning you know he's not going to be in it we're going to have to look for him in a dumpster look at their growth numbers revenue growth this year was 64 next year still expected to do over 40 revenue growth i think they're actually going to repeat this now also look at the profitability 64.4 gross margin look at this ebitda margin 40 net income margin 33.8 i mean this is insane these are monopoly numbers now if you assume this consistent level of growth for this company which i do i think i was a fool for saying that this is a 200 company i think it's way higher in fact our current price just specifies that at 365 but i have a hunch we're not going to stop right there and looking at this this might be opportunity it's down 8 in the past 30 days so i think if you're looking for a nice entry point for the stock and you're ready to admit your mistake like i am 296 295 might be the way to go but again just my opinion might be an accurate not a financial advisor please do your own research but i personally think this is a really attractive entry point to get this company at a reasonable price and by the way if you want to play around with this dcf you just saw on the screen it's available to download on our patreon page you can join it's five bucks per month plus you know you'll be supporting the channel you can participate in our zoom calls you'll be getting access to our new website which is coming up quite soon a lot of good stuff you can subscribe below five bucks per month but again this is not mandatory if you want to watch this video which i did about nikola right here why it's great i'm just kidding i'm just kidding if you do want to watch a video about another great inflation stock which is by the way tesla i did make a video which will be right here and since we're coming up on christmas if you want to give me a christmas gift i never ask this but you can subscribe right here if you want to thank you so much we'll see you tomorrow you
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