Synopsys: A High-Quality Business on My Radar

This is my first stock analysis on Substack. Normally, I focus on breaking down market trends in tweets, but I wanted to start documenting my thought process on high-quality businesses in more detail.

Right now, I don’t own Synopsys ($SNPS), but it’s been on my radar for a while. My portfolio includes a range of businesses across different industries, and I’m always looking for companies with strong fundamentals, pricing power, and long-term growth potential. Synopsys checks those boxes, so I decided to take a closer look.

The company just reported its fiscal Q1 earnings on February 26, meeting expectations with solid execution. Its long-term trajectory remains strong. But despite delivering double-digit revenue and EPS growth, SNPS stock hasn’t performed well—down 15% in 2024 and 8% year-to-date. It’s trailing both the semiconductor sector and the broader market, even as its fundamentals stay intact.

Today, …