Time in and again, companies are coming public with multiples that cannot be supported by revenue and sales growth. If you bought SNAP at it’s IPO — you paid an unsustainable 40x sales. Same with SHAK — best in class eatery but trading at an industry high 10x sales.
Three stocks have broken out this years, all of whom underwent harsh drawdowns, whilst still growing. The minor setbacks in their growth trajectory resulted in massive shareholder losses and multiple contraction. After hitting a certain level in valuation, said stocks were sopped up and bid higher. With a little earnings magic, they all took off to the races this year.
SHAK, TWTR, TWLO
So what’s next? I did a search for some high growth stocks in Exodus that underwent valuation consolidation and here are the names that stood out to me.
COHR, IRBT, SNAP, ULTA, YELP
Charts don’t matter in the long term, only valuation.
This rule applies to all companies except AMZN.
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SOXS before today seems pre-mature but then we trade very different timeframes.
For me, I’m putting some ES sell orders here from 2702.5 to 2712.5. Aiming for 10 points per contract by Friday but will settle for less if need be.
Crude will lead the pullback. But no telling to what extent yet.
Test
Fly since your snippet about a month ago on $STMP it’s shot up from $200 to $247. Un fucking real.