Suggestions for a speculative punt?

Thrugelmir

adindas said:

sevenhills said:

adindas said:

It is an utter misconception when you see the stock price has gone up and you think you should not buy it.

Surely a professional should not be looking at the ups and downs, but things like -

Revenue (£m)
Profit before tax (£m)
Adjusted EPS (p):
P/E ratio
PEG
EPS growth (%)

That ratio is suitable for long established mature companies. It is not suitable for growth companies as you could not calculate that ratios.

What measurements do you use to evaluate growth companies then?  Companies are living breathing entities that don't magically make money out of thin air.  

benbay001

It seems if you bought Microsoft at the height of the Dot Com bubble, you would have broken even in 2016. 
And for every Microsoft, countless others went bust.

adindas

benbay001 said:

Thats simply not true adindas.

Take the company you are interested in, open Excel, grow their earnings by a percentage that you think would be reasonable (20%? 30%?) for 10 years, and it will give you a "best guess" earnings figure for 10 years time. You can then apply an earning multiple to that figure that will give you a fair price in 10 years.
Work out what return you wish to make per year and you can then calculate what price you would need to pay today, to achieve that return.
I bet you get a nice shock at the sort of growth thats priced into alot of the "tech" companies.
"It is not suitable for growth companies as you could not calculate that ratios." Welcome to 1999.

Believe what you want to believe. I am not here to convince people.

the fact 

"Are the fund managers from BlackRock, ARK Invest, Baily Gifford, Baron Capital not professionals?"

"There are tons of fund managers investing in growth companies, which have not seen profit because the companies keep reinvesting  and grow like an octopus.

Now do your math the calculate P/E ratio for the companies like this what did you get ??

ARK Invest, Baron Capital (Ron Baron) bought Tesla when it was less than $100 (before split 1 for 5) since a few years ago.

And FYI I know how to read the balance sheet, financial statement. You do not even need to calculate all of these ratios, as there are already analytical sites have done that for you.

Similarly. Past performance is not a good indicator of future perfomance.

"What measurements do you use to evaluate growth companies then?  Companies are living breathing entities that don't magically make money out of thin air.  ".

We have been through this before, have not we. I already mentioned it before and I provide the link how to evaluate a growth companies. search it in this thread. Learn it ....or Google it.

One rough example for SaaS companies is "the rule of 40".

For growth companies, people are more interested in how they grow revenues year by year.

Thrugelmir

benbay001 said:

It seems if you bought Microsoft at the height of the Dot Com bubble, you would have broken even in 2016. 
And for every Microsoft, countless others went bust.

Apple was founded in 1976 in it's very early days was the verge of going bust. Though managed to survive. Wasn't until the iphone launch in 2007 that it's fortunes revived again.  

75% of the companies involved in the US Dot Com boom went bust or were taken over. 

Thrugelmir

adindas said:

We have been through this before, have not we. I already mentioned it before and I provide the link how to evaluate a growth companies. search it in this thread. Learn it ....or Google it.

I'm asking you directly as an investor.  Without the benefit of hindsight, reciting people that out of many thousands of investors backed the right horses some years ago. Somebody has to be top of the pile. Next year it'll be someone else.  Anybody can surf on the back of a momentum trade funded by a wall of retail money.  The wave though will peter out. As is the case with ARK now.  With money being pulled resulting in the sale of the underlying assets. Triggering further falls. As the vultures bide their time rather than diving in. Why buy stocks when there's a forced seller in the market. 

Moe_The_Bartender

Voyager2002 said:

What do people think of semi-conductors? A recent BBC programme mentioned two companies that are now struggling to meet demand: Taiwan Semiconductor and the Dutch ASML (who make the capital equipment that is used to manufacture chips). A highly cyclical sector, but one that seems to be on an up-swing right now.

These are two fantastic businesses and ASML is one of the very few stocks that I own personally. It could easily reach a cap of £500bn over the next few years. TSM is vulnerable to a possible Chinese takeover of Taiwa but is building manufacturing plants in the US to counter the risk. It is one of ASML's biggest customers if not the biggest.

Probably the best play in this sector is one of the semiconductor ETFs such as iShares or VanEck.

Apodemus

benbay001 said:

Thats simply not true adindas.

Take the company you are interested in, open Excel, grow their earnings by a percentage that you think would be reasonable (20%? 30%?) for 10 years, and it will give you a "best guess" earnings figure for 10 years time.

The problem with that is that earnings growth in a young company is not likely to be linear. Tech start-ups may be entirely supported by share-sales, research grants, governmental support etc until the point that early sales start to provide real income, so there may not be a reliable figure to use for earnings or a rational multiplier to use for projecting future earnings growth. The "professionals" will be trying to gauge potential market-share and the size of that future market, which is likely to be part "finger in the air" and part guesswork. Even then there is an element of intuition around which technology is likely to be successful and what competing technologies might arise.

These are not speculative punts for nothing!

Voyager2002

Moe_The_Bartender said:

These are two fantastic businesses and ASML is one of the very few stocks that I own personally. It could easily reach a cap of £500bn over the next few years. TSM is vulnerable to a possible Chinese takeover of Taiwa but is building manufacturing plants in the US to counter the risk. It is one of ASML's biggest customers if not the biggest.

Probably the best play in this sector is one of the semiconductor ETFs such as iShares or VanEck.

Cheers for that.

I note that ASML is listed in both New York and Amsterdam, and the two listings have different P/E ratios. Does that mean that investing in one or the other market will give a larger (or smaller) piece of the company for the same amount of money? I have never looked at dual listings before...

I think that a Chinese take-over of Taiwan is such a remote possibility that it is not a risk I would take into consideration. And there is so much economic co-operation between the two that disruption is unlikely: lots of business in China has Taiwanese ownership, even the public bus service throughout Wuhan!

adindas

Apodemus said:

benbay001 said:

Thats simply not true adindas.

Take the company you are interested in, open Excel, grow their earnings by a percentage that you think would be reasonable (20%? 30%?) for 10 years, and it will give you a "best guess" earnings figure for 10 years time.

The problem with that is that earnings growth in a young company is not likely to be linear. Tech start-ups may be entirely supported by share-sales, research grants, governmental support etc until the point that early sales start to provide real income, so there may not be a reliable figure to use for earnings or a rational multiplier to use for projecting future earnings growth. The "professionals" will be trying to gauge potential market-share and the size of that future market, which is likely to be part "finger in the air" and part guesswork. Even then there is an element of intuition around which technology is likely to be successful and what competing technologies might arise.

These are not speculative punts for nothing!

Those who cannot see that people who invest in growth companies are expecting an exponential growth is just an evidence of lack of basic understanding of growth companies. Why would the people, hedge fund managers want to take more risk if the return is likely the same?

I think these people is from an old school who could not see that the nature of many businessess have changed,, world of investing has changed dramatically since recent years. They are reading the books publication published in 1970s which is more suitable in that era. In that era there is no or very little companies in Fintech, SaaS, EV companies, ESG, Biotech (Genome), block chain.

A good example of growth companies is fintech companies who now has turned to become monster like Square, in their infancies how much profit did they bring? They even kept burning cash.

With the emerging of SaaS companies how many of them are currently making profit ?

Tesla P/E used to be 1000+. If you do not have a good understanding of their business model, understand their base. Why do you think Vanguard Group, Inc., Blackrock Inc, Baillie Gifford and Company, JP Morgan Chase, ARK Invest wat to invest in the companies with such a high multiple ?? Are they stupid? But you would not say that you understand the fundamental of their business. And the main who drive the business. What is the TAM for autonomous Driving and subscription business in EV, driverless taxies in the future?? A few trillion US dollars

I am not arguing the investing in growth companies is “much better” than investing and mature dinosaurs’ companies like Caterpillar, Nestle, GE, Boeing, etc. But people will get the best of both world if they adopt both approaches and provided weighting by themselves. In fact, that is the vast majorities of what hedge fund managers have been doing.

If you think you are protected from market correction, market crash by investing in more mature well establish companies, it is definitely the wrong assumption. Just look at COVID-19 market crash. Many of well-established mature companies, in the cloth retailers, travels, airlines, cinemas, entertainment, cruise lines, etc have been impacted the most.

Also how many well established mature companies went bankrupt in the past ??

benbay001

adindas said:

Apodemus said:

benbay001 said:

Thats simply not true adindas.

Take the company you are interested in, open Excel, grow their earnings by a percentage that you think would be reasonable (20%? 30%?) for 10 years, and it will give you a "best guess" earnings figure for 10 years time.

The problem with that is that earnings growth in a young company is not likely to be linear. Tech start-ups may be entirely supported by share-sales, research grants, governmental support etc until the point that early sales start to provide real income, so there may not be a reliable figure to use for earnings or a rational multiplier to use for projecting future earnings growth. The "professionals" will be trying to gauge potential market-share and the size of that future market, which is likely to be part "finger in the air" and part guesswork. Even then there is an element of intuition around which technology is likely to be successful and what competing technologies might arise.

These are not speculative punts for nothing!

 Why do you think Vanguard Group, Inc., Blackrock Inc, Baillie Gifford and Company, JP Morgan Chase, ARK Invest wat to invest in the companies with such a high multiple ?? 

They have no incentive for long term performance. Investing in the latest and greatest hot stock gets mug punters through the door who can then be creamed for a nice commission.
If there is a crash, never mind, close the fund and start again, long term performance vanishes.
Name a few particular funds and then ill look to see when they are started.