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| What are this week’s market risks or opportunities? |
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| Big Tech's biggest earnings week ended in divergence as the market applied to all companies a single test: whether free cash flow (FCF) is growing or shrinking – and it split the group cleanly. |
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| Microsoft and Amazon cleared the bar with room to spare, Azure crossing $100 billion in annual revenue and AWS accelerating to 37% growth on widening margins, and both were rewarded for it. Meta failed the same test, with costs up 55% while free cash flow all but vanished. Even Apple gave back ground on a September-quarter outlook that points to thinner margins ahead. |
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| This same test has been running in all corners of the market since the start of Q2 earnings season, and with a similar conclusion: Money keeps leaving the companies whose cash generation is buckling under capex and keeps finding the ones still compounding it. |
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| Against this backdrop, Q2 earnings season continues to belong to the stock-pickers who were able to look past the hype and into the fundamental trajectories. |
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| Which trades should I consider? |
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| Run that test outside the mega-caps and July gets interesting. |
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| The month's biggest gains came from fundamentally sound businesses the market had shelved, several of them already sitting in our AI-powered ProPicks AI strategies. |
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Just to name a few examples from this season – so far:
- Everforth: +57.0% in July
- Diamond Power Infrastructure: +53.7% in July
- Mitsui Matsushima: +53.4% in July
- PBF Energy: +52.2% in July
- TriNet Group: +34.7% in July
- Dorian LPG: +34.5% in July
- Tenet Healthcare: +32.2% in July
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| The common thread is unglamorous quality, improving margins, real cash generation, and valuations the crowd had abandoned. |
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| None of them are the AI names everyone already owns, which is precisely why the upside was still there. |
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| Should I consider this trade? |
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| Everforth just handed the FCF thesis its receipt. When our ProPicks AI models flagged the digital-engineering and IT-services firm on July 1, it was down roughly 63% on the year, trading near 29% of its 52-week high, below half its book value, on an adjusted P/E close to 6x. |
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| The market had written it off, yet the model saw a sound business at a broken price. |
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| This week's earnings settled the argument. Everforth posted EPS of $0.91 against the $0.82 expected, with revenue of $1.01 billion also ahead of consensus, and the stock jumped nearly 18% on the print to close July up 57%, the best run in our Small Cap Sprinters strategy. |
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| The same cash-flow discipline the market is imposing on Big Tech is rewarding the smaller names that deliver. The catalysts behind the call remain in place. |
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| Even after the rally, the gap has not closed. Analyst targets around $29 and fair-value models near $31 sit some 25 to 30% above the current $23.43, and management still guides toward $5.74 in 2027 earnings per share, putting the stock at roughly 4x those earnings. |
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| The FCF-driven repricing has started and it does not look finished. |
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| Data correct to 31.07.2026 |
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