I was once challenged by a famous hedge fund manager to name a stock that traded at an absurd multiple and became a long term winner. It’s a harder proposition than you might think. The rules are: the company must trade over 10x sales, lose money, and not be in the biotech sector.
The only name that I came up with was EQIX.
Looking at some of our high value tech stocks, I wonder how many of these will sustain these levels and start making money. There are a slew of biotech stocks trading at INSANE levels. However, all they need is a nod from the FDA and voila; they’ll start to do billions in revenues.
So I narrowed my list to just tech stocks.
Your thoughts?
WDAY 31x sales
SCTY 29x sales
TWTR 28x sales
WUBA 24x sales
Z 22x sales
QUNR 20x sales
ATHM 19x sales
YELP 19x sales
FB 19x sales
ARMH 17x sales
GRUB 16x sales
NOW 15x sales
SPLK 15x sales
WB 15x sales
FEYE 15x sales
QIHU 15x sales
NMBL 14x sales
LNKD 14x sales
DATA 14x sales
TRIP 13x sales
TSLA 13x sales
PANW 12x sales
BIDU 12x sales
The above stocks are the most vulnerable to correction.
Most vulnerable to correction or full on retard melt up.
That seems to be most of the stocks I watch lately
Because they are fun
The play off this is if those stocks can sustain 12-30x sales, then comparable companies trading just 5-12x might enjoy multiple expansion. I’ve been using this strategy in some of my burrito plays.
I do not believe there is any real money to be made in the above names. The real money is hiding in the 5-12x sales group. I’ll post some ideas tomorrow.
TRUE is the one… but already popped big this week. Last week and the week before was time to get in
If SPLK and FEYE keep getting beat down, they’ll be in that group.
Pick your poison fda phase III trial or
Cross off Grub… Fb drifting on “must-do”
Unless they get bought out, YELP seems like a prime candidate.
Take a look at GME
XNET!! $7 cash trading 1x sales.
Most of these companies have recently reached revenue levels where continuing their growth rates is going to be very difficult….getting to a $200M per year at a fast clip is relatively easy, but to keep their growth rates going at the rate that is necessary to justify their valuations is going to be very difficult.
As a result, I don’t believe the comeuppance is that far off for most of these companies. The next couple of earnings for many of these are going to be interesting…
Hmmm, I should prob drop scty.
Given your own thesis on the overall state of the market in the coming quarter, and the fact that these stocks are poster-boys for the excessive risk taking happening, I would suggest there are much easier ways to burn your money than holding these long term.
Minus TSLA, everyone I speak too that works in energy thinks they are the future so there may be something there.
Congratulations Cap’n fer tha BEST video yee ever posted. Laughed me limp penis off. Arrrr.
Thought of recruiting him to be a member of me crew and would’ve given him a high rank & title: Lieutenant Limp Penis. I had to research who he is, why he was arrested and found this:
http://www.anorak.co.uk/365967/tv/anorak-tv/charles-dozsas-arrest-i-was-eating-a-meal-a-succulent-chinese-meal.html/
I think GRUB is doomed due to the likes of startups like Sprig, etc.