Dealmaker’s Diary: The Bigger the Dip, the Juicier the Chip

Alpesh Patel|April 11, 2025

Editor’s Note: This week you’re receiving two Dealmaker’s Diary videos. Lucky you! That’s because, according to Alpesh, now is the time to be making deals. We hope you enjoy his video below.

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Red days are just green days playing hard to get.

Amidst the carnage, we find incredible values not seen since the pandemic.

Elevance (NYSE: ELV) is one such company.

After the latest market rout, my discounted cash flow analysis pins this stock at a 68% discount to fair value.

Even better, you get this bargain with less than 10% volatility.

That means you get the same potential profits without the overnight shakedowns.

Check out today’s Dealmaker Diary video and see my complete analysis of this brilliant company.

Click the thumbnail below to watch.

TRANSCRIPT

Hi, friends.

We’re visiting a stock that has been somewhat resilient in these volatile times.

But it also has good fundamentals.

The stock got knocked back earlier in the year because investors worried about how much money it would get from the federal government.

That issue has now been set aside. But the company has remained strong throughout.

Elevance (NYSE: ELV) is a $98 billion company.

We are not talking about a small fry. This company has $177 billion in revenues.

Elevance knows what it’s doing.

PE ratios have been pushed even lower now. So the company has gotten cheaper as a result.

Also, it’s 20th on the 2022 Fortune 500 list.

Let’s have a deeper dive into some of the AI stuff.

This is a new thing I’ve started doing with the Dealmaker Diary for each company.

I want to look at how it’s using AI.

You can read here the number of ways in which Elevance has been innovative – a number of ways in which it started using AI throughout its business.

Now, this is not the reason for it to be in Dealmaker Diary.

But it’s just good to know how up-to-speed a company is.

If that was blank, I might be worried that management’s a little bit slow.

But as you know, the main thing that attracts me is the numbers.

If we look at the GVI rating growth, value, and income, we’ve got an 8.

Anything 7, 8, 9, or 10 meets my criteria.

Now you can see on the stock price there it fell off a cliff.

I think it will be resuming that upward trend, which it tends to have despite these volatile times.

Cash Return on Capital Invested (CROCI) is a bit low.

I would have preferred it to be in the top 25% of all companies. It’s not doing that. More on that in a later video.

The forecasted price-to-earnings multiple of 12x is relatively cheap, which is true of many things. That was helped by recent price falls.

Volatility is under 10%. And in these volatile times, companies with volatility under 10%, I think, are particularly attractive. Because if anything, there will be a flight to quality.

Now, one of the things that really attracted me to the company is that we may finally be getting a MACD crossover signal.

Now, you will know in the past, I thought the MACD would continue rising, which it had done previously.

But it let us down. It flopped and fell back.

Now, it might do that yet again. It is rare for that to happen twice.

So with this one, easy to put a stop loss.

You’d put it somewhere there ($356.05).

But I expect that this trend will continue.

So you can see what I’m thinking. The current PE ratio is also historically low for the company.

Speaking of which, on a discounted cash flow basis, almost 70% is undervalued.

So even if those numbers are somewhat overly optimistic and the discounted cash flow is less than that, it still looks attractive for a variety of reasons.

The only thing I would say to you, and the caveat, is we live in extremely volatile times.

And there’s a little saying that I came across.

I’d rather be out wishing I was in than in wishing I was out.

So the rule of the day is if in doubt, leave it out.

However, volatility aside, Elevance is a solid business with solid numbers. And yes, even solid companies get hit.

But that should resume its uptrend.

That allows us to profit from recent falls, as we can with many other companies. We also get more confidence than we would have without the recent declines.

I hope that all makes sense.

Thank you very much, dear friends.