🚀📉 THE COMEBACK CONTENDERS OF 2026
Some stocks rise effortlessly with the market tide. Others—despite stable economics, reliable cash generation, and clear long-term visibility—drift lower for reasons that rarely reflect the quality of the underlying business.
The past year served as a reminder that price performance and business performance do not always move together.
As 2026 approaches, three companies—Salesforce, The Trade Desk, and Netflix—stand out not because they have outperformed, but because they have not. Each has endured its own version of pressure in 2025: valuation resets, margin recalibration, temporary growth slowdowns, or simply a shift in investor attention.
Yet beneath the surface, the structural drivers that built these businesses remain intact.
The question, then, is not whether the market has rewarded them recently—it hasn’t.
The question is whether the next upcycle favors companies with durable economics, improving internal metrics, and identifiable catalysts.
For investors who prefer substance over noise, these three names are quietly aligning for renewed strength in 2026.
This newsletter is designed precisely for someone like you—someone who wants the essentials distilled into a cohesive, actionable view without losing the nuance that matters. Let’s walk through each company with intention, focusing on what is changing beneath the headlines, what the numbers reveal, and why the coming year may differ meaningfully from the one just passed.
Salesforce: Reacceleration Hiding Behind Temporary Deceleration
Salesforce enters 2026 with a narrative shaped by slowing revenue growth during the past several quarters. The share price—down over 30% year-to-date—reflects the pressure. Yet the internal data tells a far more dimensional story.
Margins are expanding.
Operating margin climbed to 20.2%, free-cash-flow margin held around 31.6%, and gross margin rebounded sharply to 77.6% from the post-2022 trough. Net margin improved to nearly 17%, demonstrating Salesforce’s continued ability to translate subscription revenue into scalable profitability.
Return on invested capital is recovering.
The 5-year average ROIC sits at 3.8%, but the most recent 12-month measure rose to 7.6%. Improvement here is meaningful because Salesforce’s long-term earnings power correlates directly with ROIC expansion.
Valuation has reset.
Forward P/E (~19x) and forward free-cash-flow yield (6.6%) sit well below long-term averages, suggesting that expectations embedded in the price are unusually modest for a company with Salesforce’s recurring-revenue foundation.
But the pivotal element is Agentforce, the generative-AI automation platform that Salesforce expects to materially contribute beginning fiscal 2027 (starting February 2026). It does not need to become a blockbuster overnight to impact revenue growth—only to lift expansion within existing accounts. Salesforce guides for over $60 billion in fiscal 2030 revenue, implying 10%+ organic CAGR from fiscal 2026 to 2030.
On a reverse-DCF basis, Salesforce requires well under 1% free-cash-flow growth per year to justify its current price under conservative assumptions—and around 9% under more investor-friendly inputs. Both sit below management’s long-term targets.
Salesforce is no longer the hyper-growth enterprise of earlier years, nor does it need to be. What matters is that margins are expanding, growth is stabilizing, and valuation has already adjusted. When businesses optimize through a slowdown, the eventual reacceleration tends to carry more weight.
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The Trade Desk: A Premium Model Reset to Non-Premium Pricing
The Trade Desk spent years priced as a top-tier high-growth software name—because that is exactly what it was. When growth slowed and a rare revenue miss appeared early in the year, the stock corrected sharply. The 2025 decline of 66% reflects a full valuation reset, not a collapse in business fundamentals.
This is still a 25.7% ROIC business with durable margins:
- Operating margin: 18.9%
- Net margin: 15.7%
- Free-cash-flow margin: 24.7% (temporarily pressured by elevated AI-related investments)
The near-term margin compression relates primarily to Kokai, the AI-powered optimization engine designed to enhance performance on the open-internet advertising ecosystem. The company’s thesis is simple: the shift in ad spend toward retail media, connected TV, and transparent supply paths favors platforms that optimize across the entire open web rather than within a closed “walled garden.”
Kokai supports this shift with measurable lift:
- 26% better cost-per-acquisition
- 94% higher click-through rates
- Major efficiency gains via OpenPath, OpenAds, and related ecosystem tools
This is not a company losing relevance. It is a company investing ahead of the next cycle.
Analysts, however, expect revenue growth to remain roughly flat around 18%–20% through 2027, leaving room for upside. The Trade Desk anticipates renewed acceleration in 2026 as political spending normalizes and as more advertisers adopt AI-driven buying strategies across connected TV.
Under reverse-DCF analysis, ~10.8% annual free-cash-flow growth is required to justify the current valuation. Given the company’s track record, long-term market position, and ongoing shift of ad budgets toward measurable channels, this hurdle is competitive but achievable.
When premium businesses stop trading at premium valuations—yet retain premium economics—the dislocation becomes compelling for long-duration investors.
Netflix: A Mature Platform Entering a New Growth Phase
Netflix is the only name of the three that delivered a positive 2025. Shares remain up over 20% year-to-date, though the stock is still undergoing a ~20% drawdown from the summer highs. That drawdown masks the evolution happening internally.
Netflix today operates with the discipline of a seasoned global media platform rather than a high-burn growth story:
- Operating margin: 29.1%
- Net margin: 24%
- Free-cash-flow margin: 20.7%
- ROIC: 22.7%
- Forward P/E: ~35x, below long-term averages
The company continues to expand internationally, but the new accelerant is the advertising tier. Netflix expects to more than double ad revenue in 2025 and could approach $4+ billion in 2026 based on analyst estimates.
This is an additional revenue layer with high incremental margin, and it requires no fundamental change in the core content strategy. Customers unwilling to pay premium pricing for ad-free plans subsidize the model through advertiser demand. Meanwhile, premium customers maintain margin integrity.
Despite a one-time Brazilian tax expense, core performance trends remain intact. Revenue expectations show 15.5% growth in fiscal 2025 and a gradual deceleration thereafter, which is natural at Netflix’s scale. Free cash flow, however, is expected to grow faster: 29%, 35%, and 19.5% across fiscal 2025–2027.
Under conservative reverse-DCF assumptions, Netflix would need 14% annual free-cash-flow growth for the next decade to justify its valuation—well within near-term projections. Even adjustments to terminal growth and discount rates keep required growth well below recent performance.
Layer in future content-production efficiency gains from AI, global user penetration, rising engagement from live events and sports, and ongoing ARPU expansion, and Netflix enters 2026 positioned as a company with scale, margin strength, and optionality.
The Strategic View: Why These Three Names May Outperform in 2026
These companies differ by industry, maturity, and business model, but they share several threads that matter for investors preparing for 2026:
1. Each has been repriced, not structurally impaired.
Valuation compression opens an attractive entry window at the exact moment their internal fundamentals are stabilizing or improving.
2. Each operates with strong or strengthening margins.
When market pressure hits companies with weak economics, downside can compound.
When it hits companies with strong economics, it tends to create opportunity.
3. Each has a clear 2026 catalyst.
- Salesforce: Agentforce contribution and reacceleration in subscription revenue
- The Trade Desk: Full Kokai adoption cycle and normalized political-spend comparisons
- Netflix: Advertising expansion and margin uplift through content-efficiency gains
4. Each has long-term visibility that exceeds near-term noise.
High recurring revenue (Salesforce), durable customer demand (Netflix), and structural advertising shifts (The Trade Desk) provide clarity beyond the month-to-month volatility.
5. Each is positioned to benefit from macro stabilization.
As rates ease through 2026, valuation-sensitive companies with robust free-cash-flow generation typically recover ahead of the broader market.
Whether one prefers a ranking, a weighted portfolio approach, or exposure through diversified thematic allocation, the underlying principle remains the same: quality businesses fall out of favor far more often than they fall out of quality.
When the gap between fundamentals and sentiment widens, disciplined investors gain the advantage.
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