Monthly Specials (January 2025)
Kickstarting the year with one fresh stock idea: KEYS, picked using a mix of fundamentals, market context and technical setup
Welcome to the January 2025 edition of the Monthly Specials! đ§âđ
Each month, I share stock ideasâwhether for swing trades or long-term investmentsâfocusing on growth and quality companies that have grabbed my attention. These picks are chosen using a blend of qualitative insights, fundamentals, and/or technical setups.
As we kick off the new year, I like to give the market some breathing room to settle into new trends and positioning while the first earnings season unfolds. Since I recently shared several 2025 stock picks in my đ Christmas Special, Iâll take a prudent start to the year.
This month, Iâm spotlighting one stock from my watchlist that couldâve easily earned a spot in my Top Picks for 2025.
Letâs dive in!
Expanse Stocks x Finchat.io Partnership!
đ Get 20% off + 2 months free on any Finchat plan! âđ Claim Discount
Not a member yet? Join Expanse Stocks for free to access Deep Dives, Monthly Specials, Hidden Gems, stock news, and more!
đ° Whatâs New?
Free Access to đ Quarterly Updated Portfolio Composition - by Industry and Geography, plus Valuation Metrics â đ Expanse Stocks: Behind-The-Scenes
đ Free-to-Read Articles (đ linked below)
đ Deep Dives Brief â â Cloudflare | đˇââď¸ Parsons | đ˛ MPS | 𼟠Medpace | đ Arista Networks
đ Hidden Gems â Latest: Third Edition (2 British small-cap treasures)
đ¤ Monthly Picks + đ Christmas Special: Top 5 Picks for 2025
đ¸ General Investing - Latest: DCF & Reverse-Engineered DCF (GOOG, ASML examples) + Moaty Software Companies (6 Gems)
đ˘ Stock News
đŹ Join my Chat! ( đ Learn more)
đ Coming Next
đ Understanding ROIC, ROIIC, & ROCE - Measuring Investment Efficiency
đ Hidden Gems - Special Edition II (Paid Subscribers)
đ Paid Subscriber Exclusives
đ Hidden Gems - Special Editions + exclusive sections from recent Hidden Gems articles
đ Bonus Picks - From đ Christmas Special
đ DCF & Reverse DCF Models â Download in đ Portfolio Section
â Unlock Premium Content â For just $0.39/day ($12/month) or $0.27/day ($100/year) with the annual plan!
đ Full Portfolio Content - đď¸ Biweekly Updates (Last Update: 28-Feb-2025)
đ Stock Picking Methodology â Learn my long-term strategy
đź Full Portfolio Access â Holdings, Valuation metrics & Performance tracking
đ Live Trade Updates â My latest trades & watchlist additions
đ DCF & Reverse-Engineered DCF Models â Proprietary models & valuation guides
đŻ Swing Trading Strategy â My short-term trading approach
đŹ Private Community Chat - đ Learn more
đ Keysight Technologies (KEYS)
Keysight Technologies is a $28B market-cap player across industries like 5G, automotive, aerospace, and semiconductors, driving innovation with its advanced solutions in Electronic Design & Testing Solutions.
Surprisingly, despite the stock's poor performance in recent years, Iâve chosen this pick for its promising technical setup and improving fundamentals, which are showing early signs of recovery. Add to that the strong secular tailwinds itâs riding, and thereâs plenty of potential ahead. Keysight dominates a critical market, serving a wide range of industries where it stands as the clear leader. Letâs dive in, starting with the technicals and then the fundamentals đ
Technical setup
Breaking out from a multi-year base pattern, with a potential W-shaped bullish formation (purple lines) visible on the weekly chart (Chart 1).
The stock is bouncing off its rising 200-week MA and prior resistance level, and pulling the 50-week MA upward, setting the stage for a possible golden cross as it breaks out of a mature base.
On the monthly chart, the MACD is primed for a momentum boost, with the cross-up above the zero line after an extended period of consolidation.
Fundamentals: Key Valuation metrics
Analysis and Thoughts
On Fundamentals and Outlook
Muted Growth: Revenue growth has been sluggish over the past three years (+0.26% CAGR), impacted by a prolonged inventory destocking phase that began in 2021, following the Covid-19 boom.
End-Market Recovery: While some end-markets are still in recovery, others like data centers have been booming. However, data centers currently represent too small a share of revenues to offset slowdowns in telecommunication, automotive, and industrial.
Strong Financial Health: Despite these challenges, the company has maintained solid financial health and capital efficiency, as seen on metrics like ROIC, ROE, and Debt-to-Equity (see table above).
Outlook:
Managementâs latest ER and conference call hinted at some optimism ahead: âthe demand environment to remain mixed and for recovery to occur gradually through 2025â
The company expects returning to âautopilot modeâ with a base case assumption for FY '25 for revenue growth at the low end of our 5% to 7% long-term target and earnings growth in line with our +10% targetâ.
Additionally, recovery in the telecom segment is expected as 6G technology ramps up heading into 2026
On Keysightâs Moat
Moat is built on its intangible assets in test and measurement equipment design, coupled with high switching costs tied to its critical, industry-leading solutions.
The company helps OEMs and suppliers across diverse sectorsâcommunications, defense, automotive, industrial, and semiconductorsâby accelerating R&D and manufacturing timelines. Its ability to fine-tune chips and devices to exact specifications makes it indispensable, particularly in communications, where it faces no real competition.
On Keysightâs cyclicality and Recent Opportunities
While often viewed as a cyclical play, Keysight has heavily invested in R&D (doubling its competitors) and vertically integrated production (50% in-house manufacturing). These efforts have positioned the company as a leader not only in hardware but also in software, with offerings like the PathWave platform for test automation.
Recent developments, including Synopsysâ potential acquisition of Ansys and related software divestitures, are good opportunities for Keysight to acquire software at attractive valuations. Recent additionsâsuch as Synopsysâ optical business and Ansysâ PowerArtist unitâ allow Keysightâs portfolio expansion in high-performance system design and simulation software.
đ§ FINAL TAKE:
High-quality company with solid margins, ROIC and ROE, low debt, and multiple moats.
Its âone-stop-shopâ approachâintegrating hardware, software, and servicesâcreates high switching costs as customers build workflows around its solutions.
As it works through the end of a low cycle, Keysight looks like a good opportunity for long-term investors in 2025 and beyond, backed by its technical setup, fundamentals, and gradual return to growth.
â An extra for Premium Subscribers:
Reversed-DCF calculations (20-year projections) for KEYS are now available in my proprietary models. You can access and download them here đ Access Full Portfolio Content
Ready to dive deeper? Hereâs what I can offer you and how I can help you
For Free Subscribers, you now have access to:
đ Quarterly Updated Portfolio Composition by Industry and Geography, plus Valuation Metrics: đ Expanse Stocks: Behind-The-Scenes
â Unlock Premium Content â For just $0.39/day ($12/month) or $0.27/day ($100/year) with the annual plan!
đď¸ Biweekly Updates (Last Update: 28-Feb-2025)
đ Stock Picking Methodology: Learn my long-term investment strategy.
đź Full Portfolio Access: View long-term holdings with valuation metrics and performance tracking.
đ Live Trades: Stay updated on my latest trades and watchlist additions.
đ DCF & Reverse-Engineered DCF Models: Download proprietary models with calculations and evaluation guides.
đŻ Swing Trading Strategy: Learn my short-term trading technique for quick gains
Also available in the Portfolio section of the Expanse Stocks blog.