Executive summary:
- The Smart All Stars Portfolio currently holds a little under 83% in stocks with the remaining 17% (a little over US$19,167) in cash, plus an additional US$15,000 to be added throughout 2026.
- The objective is to outline a seven-layer protection framework to guide stock buying decisions amid the uncertainty surrounding the SaaSpocalypse and the closure of the Straits of Hormuz.
- Layer 1 — Business Quality: The portfolio’s 18 Core Stocks are industry leaders with the ability to grow revenue, protect profits, and generate increasing amounts of free cash flow (FCF).
- Layer 2 — Financial Resilience: The majority of Core Stocks sport healthy net cash positions. The eight stocks that carry net debt can comfortably cover their obligations through their FCF
- Layer 3 — Growth Catalysts: Seven Core Stocks have revealed clear growth catalysts in their most recent earnings, including Alphabet’s 63% cloud growth, Microsoft’s US$37 billion AI revenue run rate, and new billion-dollar AI businesses at Atlassian and ServiceNow.
- Layer 4 — Valuation: Among the Magnificent Trio, Meta stands out as the best value-for-growth opportunity. In the SaaS space, Intuit is priced at just 15.8 times trailing FCF despite delivering 17.4% revenue growth and a 55% increase in FCF.
- Layer 5 — Cash Deployment: The portfolio follows a structured cash deployment framework that scales with market declines (10% of cash at a 10% decline, up to 30% at a 30% decline), serving as a yardstick rather than a rigid rule.
- Layer 6 — Position Sizing: Portfolio-level allocation limits are in place to prevent any single stock from growing beyond the portfolio’s comfort level.
- Layer 7 — Pacing: The frequency of adding to individual stocks is moderated based on the business risk profile, with higher-risk positions given more room to prove themselves.
- Bottom Line: Multiple buying opportunities exist today, but discipline is key. The portfolio is well-positioned for both an upward move and a market correction, with a blueprint designed to navigate uncertainty without sacrificing long-term returns.
One of the most common, recurring questions is — what stocks should you buy?
Today, the question is made harder by the uncertainty surrounding SaaSpocalypse and the closure of the Straits of Hormuz.
But let’s start with what we know.
The Smart All Stars Portfolio has been setting aside a cash position for these unexpected moments.
As of 28 April 2026, the Smart All Stars Portfolio has a little under 83% invested in stocks with the remaining 17% still in cash.
If the stock market moves up, it will be happy to remain 83% invested.
If the stock market goes into a market correction, it will be happy to have put 17% of its cash to work.
Either way, the portfolio is prepared.
To put a value to its cash position: today, the portfolio has a little over US$19,167 in cash to invest.
There is also another US$5,000 each to be added in July, October, and December, totalling US$15,000 in additional cash for 2026.
In other words, there is plenty of cash to put to work.
Yet, discipline is crucial.
Hence, let’s focus our attention on three things:
- What stocks the portfolio can buy
- When the portfolio can buy these stocks
- How the portfolio will buy stocks
Sounds good? Let’s get going.
1. What Stocks to Buy: What to Watch and What to Avoid
Let’s go with the most interesting question first: what stocks should the portfolio buy first?
Coincidentally, we think the choice of business is the single most crucial factor at play.
Everything else is secondary.
Why?
Simply said: to weather a storm, you want your house to be built on solid rock.
In this case, the underlying business behind the stock is the foundation for everything else to be built.
A great business is able to grow its revenue, protect its profits, and generate increasing amounts of free cash flow (FCF).
Choosing a great business provides your first layer of protection.
There’s a bonus too: it’s much easier to value a stock when it is backed by a sturdy, growing business.
In our eyes, no amount of valuation kung-fu can save you from a struggling business.
To use the same analogy, it would be like building your house (in this case, your portfolio) on sand.
Next question: what are these great businesses?
The Core Stocks, shown below, are a good place to start.
| Core Stocks |
Alphabet ASML Atlassian Doximity Intercontinental Exchange Intuit MercadoLibre Meta Platforms Microsoft Netflix Roblox S&P Global Salesforce ServiceNow Shopify Synopsys Veeva Systems Visa |
There is a benefit in having the industry leaders on your side.
Imagine if you tie a weight on every Olympic swimmer before a competition, who do you think will win?
That’s right, it’s the strongest swimmer who still comes out ahead.
2. Financial Resilience
There is more good news: the majority of Core Stocks are cash rich, sporting healthy net cash positions on their balance sheet, as summarised below.
This is the second layer of protection.
Eight out of the 18 Core Stocks do have a net debt position but three of them, including Netflix (NASDAQ: NFLX), Salesforce (NYSE: CRM), and Visa (NYSE: V), are able to comfortably cover the deficit with less than a half year’s worth of free cash flow.
For Intuit (NYSE: INTU), it would take a little more than a year.
The duo of MercadoLibre (NASDAQ: MELI) and S&P Global (NYSE: SPGI) would take roughly two years of free cash flow which is still within an acceptable range, given the recurring nature of their businesses.
That leaves Intercontinental Exchange (NYSE: ICE), or ICE, and Synopsys (NASDAQ: SNPS) that hold substantially more debt than cash.
ICE has diverse streams of revenue while the bulk of Synopsys sales are recurring in nature.
Furthermore, ICE and Synopsys both have a long track record in generating FCF and therefore should be able to meet their debt obligations.
3. Clarity in growth catalyst
How will the portfolio prioritise which stock to add first?
In separating the great ideas from the good ideas, the clarity of the growth catalyst plays a role.
Here are seven examples of growth catalysts from Core Stocks that have reported their earnings so far:
- Alphabet (NASDAQ: GOOGL) Google Cloud surprised the market in 2026’s first quarter, posting a 63% year on year increase in segment revenue, an acceleration from the previous quarter’s 48% year on year growth. Cloud backlog also doubled over the previous quarter to US$462 billion.
- Speaking of AI infrastructure, ASML (NYSE: ASML) is starting to see demand for its extreme-ultra violet (EUV) systems kick in, prompting the company to lift its 2026 revenue guidance to between €36 billion and €40 billion. The Dutch company is planning to deliver 60 Low-NA EUV systems for 2026 and 80 for 2027, a step up from 44 in 2025.
- Elsewhere, Atlassian (NASDAQ: TEAM) is moving up market, with Service Collections — a software bundle including Jira Service Management, Customer Service Management, Assets and Rovo — exceeding US$1 billion in annualised recurring revenue (ARR), up over 30% year on year.
- Meta Platforms (NASDAQ: META) revealed a new US$10 billion annual revenue run-rate solution, Partnership Ads, and another US$20 billion annual revenue run-rate ad solution called Value Optimisation Suite.
- Not to be outdone, Microsoft (NASDAQ: MSFT) reported a US$37 billion annual revenue run rate for AI solutions in its latest quarter, up 123% year on year.
- Netflix, on the other hand, is ramping up its advertising revenue which is expected to hit US$3 billion by the end of 2026. These ad dollars carry higher margin too.
- Finally, over at ServiceNow (NYSE: NOW), the company has lifted its 2026 annual contract value (ACV) target for Now Assist from US$1 billion to US$1.5 billion, a 50% increase.
Why are growth catalysts important?
We think growth catalysts increase the visibility of the company’s future growth, providing the third layer of protection.
It’s not to say that all seven stocks above should be the first in line for the portfolio’s next buy.
Growth should be considered alongside valuation, the next topic of discussion.
4. When to Buy: Balancing Valuation with Opportunity
Which stocks are screaming buys now?
Well, it depends on which stock you are talking about.
The majority of the 18 stocks trade at a price-to-FCF (P/FCF) or price-to-earnings (P/E) ratio of between 15 and 45 times.
To state the obvious, the cheapest stock is not necessarily the best stock to buy.
Note:
- For Roblox, bookings are used in lieu of revenue as it is a better representation of its sales.
- For Alphabet, Meta, and Microsoft, the P/E ratio is used as a better interim measure of the stock’s value point.
For the graph above, we have layered in the trailing 12-months (TTM) revenue growth to give you a sense of how fast each business has been growing.
It’s not a perfect measure but serves its purpose to provide additional context.
The Magnificent Trio: Big moats at varying value points
Let’s start with the Magnificent Trio: Alphabet, Meta, and Microsoft.
All three are engaged in heavy capex investment at the moment — thus the better measure in the interim would be to use their price-to-earnings (P/E) ratio.
Between the trio, Alphabet has the highest P/E ratio at around 30 times but a matching growth rate compared to Microsoft which sports a P/E ratio of about 25.
The higher optimism behind Alphabet is likely due to its 63% year-on-year growth in Google Cloud in the most recent quarter.
Nevertheless, between the trio, Meta stands out as the best value-to-growth offer today.
The social media firm has a new pair of US$10 billion and US$20 billion annualised revenue streams, and is growing its topline faster than both Alphabet and Microsoft.
Meta also sports the lowest P/E ratio among the trio.
And that’s important because:
Valuation can be your fourth layer of protection.
The only bugbear is the absence of FCF growth for which we must be patient.
The Low-Priced Stocks
What about the stocks which are priced the cheapest?
Layering in the TTM revenue growth provides perspective on why companies such as Doximity (NASDAQ: DOCS) and Salesforce are priced at the lower end of the spectrum.
It’s not to say they are not good buys.
But when growth slows, you want to either have evidence that the business has a growth catalyst or a value point low enough to compensate for the slower growth.
In the case of Salesforce, the software-as-a-service (SaaS) firm reported that its AgentForce and Data 360 annual recurring revenue (ARR) has exceeded US$2.9 billion, up 200% year on year.
It’s partly boosted by its acquisition of Informatica Cloud.
This is a growth catalyst but the market appears to want more from Salesforce.
That’s because its trailing 12-month revenue is US$41.5 billion — thus, it will take much more to move the needle.
What about Doximity?
The company is facing headwinds due to an industry-wide policy uncertainty which has caused customers to hold back on their advertising budget.
Thus, its current fiscal year ending 31 March 2027 (FY27) is expected to be a transition year.
Nevertheless, there is reason for optimism.
Doximity’s new AI Search product is seeing very promising traction.
Already, the company has closed its “first few” AI Search deals with Top 20 Pharma manufacturers.
Revenue contribution is expected to be minimal in FY27 but could see a notable ramp in the FY27’s second half (2H’FY27).
If successful, Doximity could unlock a US$19 billion addressable market for US paid search.
In sum, we should expect FY27 to be a transition year.
The Quiet Compounders: Solid growth at a fair point
Next, there are the workhorses in the portfolio, the ones who deliver results every quarter with minimal fanfare.
Steady growers such as ICE, and S&P Global can also provide a valuable combo of decent growth at a favourable value point.
The trick is to get these shares at a P/FCF which is low compared to their historical trading range.
At the right price, you increase your odds of getting a good return.
That is the case today, in our view.
Moving on, Visa is another quiet compounder trading at a P/FCF ratio of 29 times.
Why is Visa priced higher than ICE and S&P Global?
It’s likely because of the clarity on its path forward.
Visa has acknowledged that the consumer payments market is maturing, and is making its move beyond its core business into faster growing new flows and value-added services.
Despite the difference, the same buying rule applies: at the right price, you increase your odds of getting a good return.
The Fast Growers: Higher growth, typically at a higher value point
How about the fast growers like Atlassian, Intuit, ServiceNow, and to a lesser extent, Veeva Systems?
Typically, these stocks tend to trade at the higher end of the P/FCF spectrum above, a reflection of the consistency of their performance and their superior growth rate.
The SaaSpocalypse has changed this equation.
Today, investors are able to purchase SaaS businesses that are increasing their revenue at 20%-plus rates without paying a pretty penny.
The risk?
The potential threat of AI disrupting their business models.
Between the quartet, Intuit stands out for its clarity in growth catalyst, but is priced the lowest at 15.8 times its trailing FCF.
For the fiscal quarter ended 31 January 2026 (2Q’FY26), Intuit delivered 17.4% year on year topline growth alongside a 55% increase in FCF.
Growth was largely complemented by increasing usage of Intuit’s AI agents too.
Next, as we mentioned above, Atlassian and ServiceNow have both revealed new US$1 billion-plus AI businesses.
For context, Atlassian’s TTM revenue is US$6.2 billion while ServiceNow’s TTM revenue is close to US$14 billion — thus, both AI revenue streams are already making a difference in their business.
The same cannot be said about Veeva Systems (NYSE: VEEV), though.
The vertical SaaS is still in the early stages of introducing AI agents to its ecosystem and thus, has some way to go before it makes a difference.
Finally, there are the uber high-growth businesses.
The outliers include MercadoLibre (NASDAQ: MELI) and Shopify (NYSE: SHOP) which are priced dearly due to their consistent high growth.
Both companies also serve in the online retail space, one of the largest addressable markets available.
In 2026’s first quarter, Shopify delivered a lung-bursting 34.3% year on year growth coupled with a pleasing 31.1% increase in FCF.
Add a clean balance sheet with nearly US$6.5 billion in cash, and you have a well-positioned company.
The bugbear?
Shares trade at a nosebleed 61.4 times its trailing FCF and rarely trade at low value points.
For MercadoLibre, the Latin American online retailer is ramping up its lending operations, leading to its margins being compressed in the short term.
It’s a fair trade-off, in our eyes, but the market is spooked.
While we think that its adjusted FCF will return stronger in the future, investing in MercadoLibre is not high on the list of priorities, especially when it is one of the larger positions in the portfolio.
Then, there’s Netflix (NASDAQ: NFLX).
The online streaming service has the same growth rate as Veeva Systems but is priced at over 30 times its FCF.
The difference?
As we mentioned above, it’s likely due to the visibility of its advertising revenue which is expected to ramp up to US$3 billion this year.
These ad dollars come with higher margins too.
The Odd Ducks: Uniquely valued
The final trio of Roblox, Synopsys, and ASML present three separate odd duck scenarios.
For starters, ASML is the most expensive stock on paper but its TTM revenue growth understates what it’s expected to deliver in 2026.
As stated earlier, the Dutch company is starting to see demand for its extreme-ultra violet (EUV) systems kick in, prompting the company to lift its 2026 revenue guidance to between €36 billion and €40 billion.
By the same token, its TTM FCF is not reflective of its true FCF generation strength.
Similarly, Synopsys is in the process of digesting a huge acquisition in Ansys — thus, it may take a couple of quarters before we get a clean read on the make-up of the new enlarged business which should come with higher FCF.
How the Portfolio Will Buy Stocks
Let’s pause for a moment and recap what you have learnt so far.
- Choosing a great business provides your first layer of protection.
- Focusing on businesses with healthy net cash positions on their balance sheet provides the second layer of protection.
- Next, growth catalysts increase the visibility of the company’s future growth, providing the third layer of protection.
- A good value point adds the fourth layer of protection.
All good?
Let’s continue on.
In the investment world, there is too much attention on what stocks to buy and when you should buy them.
What is often neglected is how you buy the stocks.
As a first step, moderating your cash deployment is a valuable tool at your disposal, making up your fifth layer of protection.
The Smart All Stars Portfolio has outlined its plan on how it will be deploying its cash in the event of a downturn.
The table below provides the framework.
At the moment, the S&P 500 (INDEXSP: .INX) and NASDAQ (INDEXNASDAQ: .IXIC) are still fairly close to their respective 52-week highs.
Thus, there is no real urgency on deploying cash in a big way.
Here’s a key point you don’t want to miss …
… the range above represents a YARDSTICK to keep your cash deployment in check.
It’s not meant to be the driver for how fast you should invest.
The key determinant is still the business behind the stock.
If there are plenty of buying opportunities at good value points, then the cash range above provides boundary lines for your investment pace.
But if there isn’t, then you shouldn’t be buying.
We think that the former applies today with multiple opportunities for The Smart All Stars Portfolio to invest today.
Portfolio-level decisions
Choosing the stock is the first step.
Finding the right value point to buy is the second.
In both cases, these are stock level decisions to be made.
However, there are also the portfolio level decisions to consider.
For instance, Meta stands out as one of the best value-for-growth opportunities within the portfolio.
Yet, the stock occupies a 9% position within The Smart All Stars Portfolio, as of 28 April 2026.
Hence, while Meta looks like an opportunity today, buying more will increase the weightage beyond the portfolio’s comfort level.
Keeping an eye on the stock allocation provides your sixth layer of protection.
Then, there is the matter of how often you buy a stock.
Let’s start with what you shouldn’t do.
Your main consideration should NOT be how much the stock price has fallen.
Remember: you DON’T have to act for every single double-digit decline in a stock.
If you chase a stock as it falls, you may end up with an allocation higher than what you intended.
A better approach would be to pace your buys based on the business risk profile.
To use an example: Doximity and Roblox are still youngsters in the portfolio, with still much to prove.
Hence, the portfolio is leaving more room for the business to show what it can do before adding to its position.
In other words, moderating your pace of adding to individual stocks, based on their risk profile, can provide your seventh layer of protection.
Get Smart: Knowing what you don’t know
The erratic behaviour from the Trump administration has left businesses in an uncertain operating environment.
That’s what investors have to get comfortable with: NOT knowing everything.
From what we have seen so far, it’s better to assume that all businesses will be affected to a certain degree.
While some of the negative impacts are visible, from what we have seen and heard so far from business leaders, the second-order and third-order impacts are hard to predict ahead of time.
So, let’s focus on what we can control.
The above provides a blueprint to navigating a highly uncertain business environment.
Keeping a level head while taking our time to invest may be the best solution as we observe how the situation unfolds.
We’ll get through this together!
Disclosure: Chin Hui Leong owns all the shares mentioned.
