Jason Del Vicario's Top Stock Picks for September 2024: Evolution AB, Paycom, Estee Lauder

Jason Del Vicario, a portfolio manager at Hillside Wealth Management, has shared his top stock picks for September 2024. Del Vicario, known for his meticulous and long-term investment approach, focuses on high-quality companies that consistently deliver strong returns on invested capital. His latest picks include Evolution AB, Paycom, and Estee Lauder—three companies that stand out for their solid financials and growth potential.

But why these companies? What makes them attractive in today’s challenging market environment? Let’s dive into Jason Del Vicario’s top picks for September 2024 and explore the investment philosophy behind them.

Del Vicario’s investment philosophy is rooted in a long-term mindset. He focuses on businesses that can compound shareholder wealth over decades. His strategy revolves around selecting high-quality companies with a proven ability to generate strong returns on capital. By holding a concentrated portfolio of 26 global businesses, Del Vicario ensures each selection meets strict quality criteria, allowing for substantial exposure to companies he believes in.

While many investors are swayed by short-term economic fluctuations, Del Vicario remains unfazed. His strategy doesn’t change based on market conditions. In fact, he welcomes economic downturns because they often present opportunities to purchase high-quality companies at discounted prices. Del Vicario’s top picks for September 2024 are emblematic of his focus on businesses that can thrive over the long term, regardless of the macroeconomic backdrop.

Evolution AB (EVO SWE)

Evolution AB is the world’s largest online casino provider that you’ve probably never heard of—because it operates in the B2B space rather than serving consumers directly. Evolution’s focus is on providing white-label services to land-based and online casinos, helping them dominate the online gaming market. Its dominant market share, excellent margins, and debt-free balance sheet make Evolution a powerhouse in its sector.

Evolution’s growth potential is significant, especially in regions like the U.S. and Asia, where online gaming is expanding rapidly. With a current profit multiple of 17, Del Vicario believes the stock represents an attractive entry point. He recently added to his position in August 2024, confident that Evolution’s long growth runway will continue to deliver value to shareholders.

Paycom (PAYC NYSE)

Paycom is a new addition to Del Vicario’s portfolio. The company, founded and run by its original creator, offers mission-critical payroll software to businesses across North America. Once a company starts using Paycom, it rarely switches to another provider due to the essential nature of its service.

Since its peak in October 2021, Paycom’s stock has experienced a significant drop, making it an attractive option for long-term investors like Del Vicario. Despite the temporary slowdown in growth, Paycom is well-positioned to continue gaining market share from slower competitors like ADP and Paychex. Del Vicario initiated a position when the stock was in the $140s and plans to add more if the price dips further, as his investment thesis evolves.

Estee Lauder (EL NYSE)

Estee Lauder is another new position in Del Vicario’s portfolio for 2024. Known globally for its luxury beauty products, Estee Lauder has faced some challenges recently, with its profits taking a hit. However, Del Vicario sees these issues as short-term and self-inflicted, rather than indicative of a long-term decline in the brand’s value.

Estee Lauder’s valuation has corrected from its all-time high in January 2022, presenting a potential buying opportunity for long-term investors. The Lauder family, which owns a significant portion of the company and holds board positions, remains committed to the brand’s success. Del Vicario began accumulating shares in the low $100s and recently added more in August when the stock dipped to $91. He is waiting for a profit turnaround before making further investments but remains confident in the brand’s long-term potential.

Del Vicario’s Top Investment Criteria

What sets Del Vicario apart from other investors is his stringent focus on return on invested capital (ROIC). He believes that companies with consistently high ROIC are best suited for compounding wealth over the long term. This philosophy is reflected in his concentrated portfolio, where the top 10 positions represent 73% of his total equity holdings.

2024 has been a relatively quiet year for Hillside Wealth Management, with only three new positions added and two eliminated. This reflects Del Vicario’s cautious yet opportunistic approach to investing. When high-quality businesses present attractive entry points, he doesn’t hesitate to add them to his portfolio.

Del Vicario’s portfolio benefits from its multi-currency exposure, which he views as a strength. He does not hedge his currency exposure, believing that it diversifies his portfolio and reduces risk over the long term.

Interest rates, inflation, and geopolitics are often viewed as critical factors in investment decision-making, but Del Vicario takes a different approach. Because his investment time frame spans decades, he assumes that various macro regimes will come and go over time. As a result, short-term economic fluctuations are largely irrelevant to his strategy.

Jason Del Vicario’s Investment Philosophy in Practice

Del Vicario’s top picks reflect his commitment to high-quality businesses. Whether it’s Evolution AB’s dominance in the online casino space, Paycom’s mission-critical software, or Estee Lauder’s luxury beauty brands, each company in his portfolio meets his strict criteria for quality and long-term growth potential.

The key to Del Vicario’s strategy is compounding wealth over the long term. By investing in businesses that consistently deliver strong returns on invested capital, he believes he can generate substantial returns for his clients over decades, not just months or years.

What Makes Evolution AB a Strong Pick?

Evolution AB has carved out a dominant position in the online casino industry, making it a leader in the B2B space. Its white-label solutions allow land-based and online casinos to offer top-tier gaming experiences without building their own infrastructure. One of Evolution’s key strengths is its debt-free balance sheet, which positions the company well for long-term growth. With no debt, Evolution can reinvest its profits into expanding its operations in key growth markets like the U.S. and Asia.

Why Paycom Stands Out in 2024

Paycom’s payroll software is mission-critical for its clients. Once a company adopts Paycom’s platform, it’s unlikely to switch providers, making customer retention rates high. This provides Paycom with a stable revenue stream and long-term growth potential. Founder-run businesses often benefit from a long-term vision that prioritizes growth over short-term gains. Paycom’s founder-led structure gives it an edge over competitors, as the company can focus on expanding its market share without being weighed down by debt.

Estee Lauder’s Potential for a Comeback

Despite recent profit setbacks, Estee Lauder remains a global powerhouse in the beauty industry. Its well-established brands have a loyal customer base, and Del Vicario believes the company will recover from its current challenges. The Lauder family’s involvement in the business is a significant advantage, providing stability and long-term vision. Their commitment to the brand’s success makes Estee Lauder a strong candidate for long-term growth.

Key Takeaways from Jason Del Vicario’s September 2024 Picks

Jason Del Vicario’s top picks for September 2024—Evolution AB, Paycom, and Estee Lauder—are all high-quality businesses with strong growth potential. Each company meets his strict criteria for generating strong returns on invested capital and compounding wealth over the long term. While the economic environment may be challenging, Del Vicario’s long-term mindset and focus on quality make these picks attractive for patient investors.

Conclusion

Jason Del Vicario’s top picks for September 2024 reflect his commitment to investing in high-quality businesses that can generate long-term wealth. His focus on companies with strong returns on capital, solid balance sheets, and growth potential positions his portfolio for success in any market environment. Whether it’s Evolution AB’s dominance in online gaming, Paycom’s mission-critical payroll software, or Estee Lauder’s resilience in the beauty industry, Del Vicario’s selections offer a roadmap for long-term growth.