YWR: Global Factor Model
Time to screen the world to understand the big estimate trends and maybe find some interesting investment ideas. The Global Factor Model is looking for that sweet tasting combination of rising estimates, attractive valuations and positive price momentum.
Links to all the ranking sheets and dashboards (YWR Retool Dashboard and Tableau Dashboard) for over 9,000 global stocks are at the bottom of the post.
We always start with the 30 best ranked stocks in the world.
YWR Global Top 30
Who are all these Taiwanese and Japanese electronics firms on <10x P/E’s with earnings estimates going through the roof? We need to know these names better. Here’s a quick run down.
Innodisk (5289-ROCE) — Industrial-grade SSDs, DRAM modules, and memory cards. Sells into factory automation, medical, automotive, defense. Niche but high-margin. Reliability matters more than price for these customers.
Macronix (2337-TAI) — World’s largest NOR flash maker. NOR is the code/boot storage that lives inside automotive ECUs, networking gear, MCUs. Less glamorous than NAND but very sticky — once a part is designed in, customers don’t switch.
Nanya Technology (2408-TAI) — Taiwan’s largest pure-play DRAM company, spun out of Formosa Plastics. PC and consumer DRAM. Sub-scale vs Samsung / SK Hynix / Micron and minimal HBM. The bull case is a commodity DRAM up-cycle plus recovery in non-AI memory.
WPG Holdings (3702-TAI) — Asia’s biggest semiconductor distributor. Channels chips from NVDA, AMD, Qualcomm and dozens of others into Asian OEMs and ODMs. Effectively a leveraged play on Asian electronics manufacturing volumes.
Winbond Electronics (2344-TAI) — Specialty memory and MCUs. Low-power DRAM (mobile, IoT), NOR flash, plus microcontrollers via its Nuvoton subsidiary. Automotive and consumer end-markets. Scrappier than Nanya, less commodity exposure.
ADATA Technology (3260-ROCO) — Consumer memory brand. SSDs, DRAM modules, memory cards, mobile accessories. Brand-led — Adata is what you see on the shelf at retail. Also pushing into industrial, but consumer is the core.
Megachips Corporation (6875-TKS) — Japanese fabless ASIC house. The Nintendo connection is the well-known piece (key supplier to the Switch and successors). The growth engine has actually been SiTime, its MEMS timing-solutions subsidiary.
Phison Electronics (8299-ROCO) — NAND controller specialist. Makes the controller chips inside SSDs and USB drives. Bundles its controllers with NAND from the big three into turnkey storage modules for OEMs. Pure NAND-volume play.
Kioxia Holdings (285A-TKS) — Japan’s NAND giant, formerly Toshiba Memory. IPO’d in Tokyo December 2024. #2 NAND maker globally, JV with Western Digital. Highly cyclical — current bull case is enterprise SSD demand from AI data centers.
WT Microelectronics (3036-TAI) — The other big Taiwanese distributor. Acquired Canada’s Future Electronics in 2024 and jumped into the world’s top three semi distributors. Same channel model as WPG but with global reach now.
Basically, it’s everything in the downstream memory and semiconductor supply chain.
Top 5 Ranked Sectors
What’s the top ranked sector in the world that everyone is ‘neutral’ on?
Energy. Or ‘Integrated Oil’.
When I look at all the factor model data and try to pull out ‘the big’ thing, this is it. Yes, Semiconductors and Taiwanese NAND plays are through the roof, but the time for getting into that trade was last year when it was first starting (Would you be interested in Nvidia on 7x Earnings?). Not now when it’s going parabolic.
Energy looks more interesting. Integrated Oil stocks have the second best estimate momentum score in the world and yet everyone is hesitant to get bullish on oil stocks.
According to the BofA Survey investors are 2% overweight Energy. That’s nothing.
Let’s start to imagine that Iran is turning into the Ukraine War. The US and Israel have a challenge. You can’t bomb the crap out of someone then walk away and leave them with a nuclear bomb. So one way or the other you have to get it out. Mostly likely the hard way. Which is going to take time. Which means the Straight of Hormuz could be like the Donbas and the world’s entire energy flow needs to be rearchitected away from the Middle East. It seems unimaginable, but it’s a possibility.
Maybe in the future the world sources more energy from Brazil and Africa. The US is the new source of stable energy flows (and tokens). Maybe Europe has to rethink its relationship with Russia just for the energy. Maybe it’s a bull market for renewables (Untouchable #8)
But it’s not just oil. Trapped behind the Straight of Hormuz is the entire Middle East petrochemical complex. Which is why Specialty Chemicals is another top ranked sector.
In the YWR Retool Dashboard (link below) you can see the earnings estimates for LyondellBasell inflecting upwards. Interestingly, the shares haven’t moved much if it’s going to earn $10/share. But everyone thinks it’s temporary. Which is the potential trade. DOW looks the same.
We have to also mention refining. It doesn’t make the top 5 sector list, because there aren’t many companies, but refining has the best estimate momentum of any sector in the world. Integrated Oil is second.
The side benefit to refiners like Marathon and Phillips66 is you get their US pipeline networks practically for free. Our big takeaway from The Final Bottleneck was that US natural gas pipelines are in a multi-year bull market as demand for US natural gas grows (datacenter, factories, LNG).
Buy for the refining party, stay for the structural natural gas pipeline bull market.
Can I say another thing?
Look at all those top ranked sectors in the Tableau dashboard for estimate momentum. Go down the list.
Refining, oil, coal, aluminium, textiles, electronics, semiconductors, other metals, chemicals, trucking, agricultural chemicals, industrial machinery, contract drilling, metal fabrication…
It’s an industrial boom. But doesn’t it also seem like a massive inflation wave coming?
And look at the monthly track record below of those top 5 sectors. You can see the wave which started in January. I’m not saying it’s a market killer, but it seems possible 10 yrs go to 6%.
Top 5 Ranked Countries
These trends at the company level lead to country level allocation themes. South Korea is the perfect example. When we bought Korea on the lows in December 2024 (Who am I ETF?) we thought we were making a beaten down country ETF bet. We didn’t realise we were making an AI memory bet. But we aren’t complaining.
Taiwan is another example. It is the heart of the AI supply chain and has the 3rd highest number of top ranked companies in the Factor Model. Their index is also going vertical.
China always has a lot machinery and electronics companies which score well for estimate revisions at attractive valuations but the challenge for investors is the communications gap. To their credit Chinese companies are working on this. When we went to China in September last year I was impressed with the showrooms they built for investors.
The YWR Factor Model data is telling us we need to make more trips to Asia and build up our networks there.
Canada has ranked well all year. First it was because of the gold miners, now it is a mix of energy and mining companies. If this is going to continue TMX Group might be a way to play everything.
Or… if you want the same trend, an exchange exposed to a market with lots of mining stocks, but trading on the lows… you look at buying shares in the ASX.
Below are links to all the rankings sheets, and the YWR Retool Dashboard which I love and use all the time. I like being able to quickly see 12 months of earnings revisions.
I’ve also attached the top stocks which showed up on our inflection screens. They mostly overlap with the energy theme so I didn’t go into it, but shipping shows up as a big sector.
Check it out and let me know any other data insights you have.
Oh, and Chapter 9 of The Nairobi Solution drops on Sunday. We are nearing the end of our story. Can Erik save the Turkana Trust deal and get his payday, or does it turn into a train smash?
