Sticking with Block (Formerly Known as Square)

Here is my thesis:

First, and most importantly, Block is financially sound with an Altman-Z score of 6.01. It also has positive free cash flow.

It's revenue growth has not disappointed for 2021, and my projections, even with using a supernormal growth adjustment, has it growing 30% per annum over the next five years. Even with the most bearish case, it has a present value of $450 and a five-year future value of $900.

The downturn in earnings for 2021 is disappointing for sure, but still remains positive, which is a requirement for inclusion in the S&P 500 index. When that happens, most large-cap mutual funds will be turned into buyers of this stock. I had to make some assumptions finding fair and future values for this one. First, I am assuming that its SG&A margin will remain stable at 19%. I am also assuming a low end P/E of 23. With that, I have it pegged with a fair value of $176, and an average future value of $327 .

As I see it, at worst this company is worth $198 right now, and should be worth $490 in five years. Time will tell.