Fabricio Suarez Peña @Fabricio0709: "$DOU.DE Douglas AG: diversification from..."

Mexico

Edited

$DOU.DE (Douglas AG) Douglas AG: diversification from the US market and economy. I decided to invest in this company. I will give my insights and personal opinion about why I think this is a great investment. 1. Very undervalued (high margin of safety) 2. Competitive advantages 3. Good growth 4. It helps to diversify the portfolio 1. In my DCF (discounted free cash flow) valuation, I realized the company is trading at a considerably lower price than fair value. I assumed a conservative growth in free cash flow (owners’ earnings) and also subtracted lease expenses to obtain a better free cash flow since I think paying rent is part of the business’s capex. This seems like a very undervalued company. 2. If we analyze the business model, we will realize that the company has a very strong competitive advantage, and that lowers the overall risk from investing in it. Some of the competitive advantages: Market share leadership in Europe; omnichannel platform (integration from physical stores and online e-commerce); supplier and brand relationship (suppliers prefer to give products to Douglas as exclusive or early access); loyalty programs; scale efficiencies; barriers to entry. 3. The company has the potential to keep growing sales in underserved parts of the region, and this can be seen in their sales growth in these markets. This will be greater for efficiency and economies of scale. 4. This is particularly true for the portfolio since it could be heavily weighted towards the U.S. economy and equities. And with the addition of Douglas to the portfolio, we are less dependent on the US equities/economic. In summary, a combination of all these factors (and more that are not listed for simplicity) makes it for me a no-brainer to invest in, and I will keep monitoring for any material changes. $SPX500 $FEZ (SPDR EURO STOXX 50 ETF) $VTI (Vanguard Total Stock Market ETF) $ULTA (Ulta Beauty Inc) $MC.PA (LVMH Moet Hennessy Louis Vuitton SA)