Modern Formula Monthly Run: July 5, 2026

Deckers is the cleanest example in this run of what the process is trying to find: an asset-light, high-return brand business that appears statistically cheap because investors are worried about growth normalization. HOKA and UGG give the company real franchise value, while net cash, free cash flow, and buybacks add downside support. The key debate is whether slower growth is a temporary valuation reset or the start of a more durable brand maturity problem.

IDT ranks highly because it has the kind of hidden-parts complexity that can make a good business look less obvious on a screen. NRS, net2phone, and BOSS Money create a sum-of-the-parts angle, and the balance sheet gives the company room to keep compounding or returning capital. The opportunity is less about a simple multiple and more about whether the market is undervaluing a collection of underfollowed assets.

Crocs remains a high-margin brand compounder with strong cash generation and aggressive buybacks. The reason it is not scored closer to the very top is the HEYDUDE normalization issue and acquisition leverage, which make normalized earnings less clean than the core Crocs brand alone. The stock fits the framework well if the market is over-penalizing a real but manageable brand-transition problem.

Gilead is a durable pharmaceutical cash-flow engine with an HIV franchise, oncology exposure, free cash flow, dividends, and scale. The score is capped by product-cycle and patent-cliff risk, which are permanent features of large pharma underwriting. It is a good fit for the framework when viewed as cash-flow value, not as a clean long-duration compounder.

Ituran, a net-cash telematics/recovery-subscription compounder with record subscription revenue, strong margins, dividends and buybacks; the framework treats it as a strong small-cap Greenblatt fit, with the durable niche offsetting small scale.

Exelixis is one of the cleaner profitable oncology names in the run because it has real cabozantinib earnings rather than purely speculative pipeline value. The main issue is product concentration and the eventual patent/pipeline transition, which makes the score meaningfully lower than more diversified compounders. The opportunity is underwriteable, but it requires respect for concentration risk.

Halozyme has an attractive royalty/platform structure built around ENHANZE, with high margins and buybacks supporting the case. The business model is appealing, but partner concentration and patent-duration questions keep it from scoring like a cleaner compounder. The opportunity is strongest if the market is undervaluing the durability of the royalty stream.

Cigna has a real healthcare earnings base, buybacks, and a discounted valuation. The main debate is not whether the business is real, but how much to penalize PBM regulation, political scrutiny, and medical-cost trend risk. It belongs in the good-candidate tier because the cash flow is substantial, but the risk hair is also substantial.

Abercrombie, an A&F/Hollister brand turnaround to high margins with net cash and buybacks; the research case suggests peak-margin normalization and teen-apparel cyclicality are the risks keeping it below cleaner compounders.

Tapestry brings a genuine high-return Coach franchise and cash generation, helped by aggressive buybacks after the Capri transaction failed. The quality is mature rather than hyper-growth, and fashion-cycle risk is always present. It ranks as a reasonable brand-value candidate where capital return can matter if the market is too pessimistic.

Icon, a scaled CRO/clinical-services franchise with real FCF and buybacks, cheap after a selloff; both flag biotech-funding and pharma-R&D cyclicality, with A more generous on the quality.

Qualcomm, a high-FCF chipset business plus a high-margin QTL licensing moat; A prizes the IP/licensing franchise while B weights the Apple in-house-modem loss and handset maturity as the overhang — the widest gap among the top names.

Keurig Dr Pepper combines recurring beverage demand, coffee exposure, and brand strength with a potential corporate-action catalyst from the planned beverage/coffee split. The quality is real, but the setup includes leverage and execution questions around how the separation is handled. It ranks well because the business is understandable and cash-generative, with a plausible path for the market to reassess it.

NetApp is an established storage and data-infrastructure company with free cash flow, buybacks, and decent returns on capital. The opportunity is tempered by cyclical IT spending and the ongoing shift toward cloud infrastructure. It is a real business at a plausible value price, but not a frictionless compounder.

Restaurant Brands, an asset-light high-ROIC Burger King/Popeyes/Tim Hortons franchisor with real FCF and a dividend; both flag leverage and mature-BK execution, with A more constructive.