Individual stock tip

[Hank]

We’ve had to delete a fair bit of spam posted to this thread, so it’s time to shut this down.

[jacoavlu]

Look if you think you can do what a majority of mutual fund managers cannot do, suit yourself. I’ve never even heard of that company and would have zero interest investing a significant amount of money in a company I’ve never heard of.

I’m on the same side as you but to be fair in some ways it’s easier for an individual investor than a fund manager. The manager can be forced into buys and sells based on inflows and outflows and the better their fund performance, the more inflows come, which means they have to invest funds or suffer from cash drag.

but an individual has to take a lot of risk, if they want reward. You have to be patient, and then be willing to bet big when the time comes

certainly not for me

i will admit to an individual position in BRK. But that’s a bit of a hedge bc I think BRK is likely to outperform my otherwise broad US index holdings in a down market.

[Max Power]

...It doesn’t take an MBA to understand the numbers I provided for AYX and see how good of a business it is. It might take one to understand the earnings reports for much larger, diverse companies which is why I try to stick with smaller, focused companies with an easy to understand financial outlook.

I think most people would agree that the business prospects for AYX are fantastic...

This fundamental stuff is all fine and good, but there are tons of small companies that are not a success in stock price terms. There are some mid/big companies that you can say the same thing for. HON and its spinoff REZI are two visible examples of good profitable first rate companies with top management, talent, pipeline of good products, long history of profits... yet relatively low prices recently. Meanwhile TSLA or UBER prices soar to the moon with negative earnings and pixie dust promises which may or may not materialize. Fundamentals do not always tell the whole story of what prices will do.

When you are a hedge fund mammoth that can push a stock 3% simply by buying or selling and are buying it for dividends that will be in the millions quarterly, go ahead and do all the fundamentals you like. When you are the little guy trying to get something you like and make a buck, the sentiment and tech trends are arguably more important (although you certainly can find solid corporations that also have good trends and sentiment and/or a bargain price).

I'd suggested FUN and SIX a few weeks ago in this thread since coaster parks were so beat up due to COVID pessimism, and they've basically doubled in the last month... yet their gates have been closed all along. They have had no revenue, so I guess they should be same/down, right? They are solid companies, esp FUN, and have good product with history of profitability and dividends... but the recent price swings are not based on any facts and figures (besides decent debt handling by FUN to prep for closure in all of 2020). The fast and hard rebounds for these two are purely on public perception and that a rising market tide lifts all ships (esp good ones or ones that had dipped too far in low tide, such as these).

The point is that you can do fine right now buying basically anything good (that you wouldn't mind owning a year or two from now) in terms of singles or indexes, enjoying the tremendous volatility, and jumping out with profits or just riding the waves and knowing you have a solid equity that's a dividend cow if it doesn't go up in price soon. It is short-sighted and simply incorrect to tell people not to buy what they don't know all of the balance sheet stats on. Over years and decades? Yeah, fundamentals absolutely matter, esp for dividend stocks. Over short term? Sentiment and random chance often matters a whole lot more, esp in a volatile stock climate.

The prices were, and still sorta are, crashed out due to general fear and sentiment about the market and economy... P/E or book value or QE and XYZ are quite secondary right now and we all know it. Fundamentals are a very smaaall part of the game at present. If you truly believe in your small/mid cap techs that nobody else has heard of, then good for you. I hope you stick with them... but just be prepared to stick with them for years and to potentially lose a lot of opportunities as the price stays relatively stagnant, esp if it doesn't pay dividend. Stock price can refuse to line up with fundamental prices/QE/ratios/etc for many months or years, as in examples above. Conversely, it can skyrocket in months or even double in a day if they are bought out. I've had both happen over the years... all without scrutinizing numbers very much. I hope it works out for you, though.

The point is that what works for you is not always best for everyone. There are many way to find success and gains in the markets. In general, the eggheads don't do very well since they consume much time and then get mad when what "should have" happened does not. With the volatility in the past few months, technical investors and swing traders are definitely doing much better overall than fundamental investors who are balance sheet screeners. Everyone can win in different ways, though.

[fatlittlepig]

I don’t claim to be Benjamin Graham but I believe that since I only need to really know 8-10 companies I can understand them better than most. Enough at least to determine they have a durable competitive advantage and good financial prospects, and I can follow along enough with quarterly reports to identify when they no longer meet my investing criteria. I might be absolutely wrong 10-20% of the time but when I’m right the rewards are far greater than the downsides. The fact is that the vast majority of trades are algorithmically or based on rules followed by ETFs; most individual investors do not even have more than a superficial understanding of the numbers beyond the headlines; many follow analysts who have competing interests and may be following too many companies (some of their price targets indicate they haven’t looked at a company in months); institutions are limited in how much they can buy in most of the small to medium cap companies I look for; money managers are usually too afraid to suggest high volatility stocks to their clients; and many investors completely disregard nearly every high growth stock based on valuation unless it is a well known consumer facing company like Netflix or Amazon. By being focused and knowing more than almost all individual investors and probably many institutional investors, I think I can come out ahead.

It doesn’t take an MBA to understand the numbers I provided for AYX and see how good of a business it is. It might take one to understand the earnings reports for much larger, diverse companies which is why I try to stick with smaller, focused companies with an easy to understand financial outlook.

I think most people would agree that the business prospects for AYX are fantastic. There may be little quibbles here or there (slowing rate of customer growth or risks due to lack of a cloud based product) but for the most part the differences come down to valuation. Many will look at a P/E over 100 and completely ignore it. Others will say a P/S or P/EV of 15-20 is too high and that any growth is priced in. I have found that the biggest winners are always “overvalued” so I don’t usually pay too much attention to it unless it hits mainstream like Zoom. I understand a slight hiccup could mean a 20-50% drop in share price but I am willing to take that risk for the much greater rewards. When a stock is up 3-5x in a few years like NVDA, you’re still well ahead of the game even with a 50% drop.

Anyway, just my opinion. If I wanted to save myself a few hours a week of research I’d just buy the total market or S&P 500 and just delete the financial apps from my phone. I personally feel that investing based on a qualitative feel for a company or general market themes leaves you in the same boat as the vast majority of individual investors and well behind institutional investors in terms of knowledge, so it’s hard to be better at picking companies than the rest of the market.

Look if you think you can do what a majority of mutual fund managers cannot do, suit yourself. I’ve never even heard of that company and would have zero interest investing a significant amount of money in a company I’ve never heard of.

[nephron]

I think that back in February, they should have created a "social distancing" fund with things like amazon, ups, walmart, etc. Seems pretty obvious in retrospect.

[jfoxcpacfp]

This thread should be renamed “online gambling is still legal”

[mgchan]

so you think your abilities to analyze companies leads to an ability to select stocks that outperform the market? my stocks have outperformed the market, but i definitely do not think it is because of ability to analyze a company's balance sheets. The problem is two equally intelligent people will look at the exact same data (revenue growth, dividend yield, earnings growth, subscriber growth, growing margins, recurring revenue blah blah) and come to exact opposite conclusions.

I don’t claim to be Benjamin Graham but I believe that since I only need to really know 8-10 companies I can understand them better than most. Enough at least to determine they have a durable competitive advantage and good financial prospects, and I can follow along enough with quarterly reports to identify when they no longer meet my investing criteria. I might be absolutely wrong 10-20% of the time but when I’m right the rewards are far greater than the downsides. The fact is that the vast majority of trades are algorithmically or based on rules followed by ETFs; most individual investors do not even have more than a superficial understanding of the numbers beyond the headlines; many follow analysts who have competing interests and may be following too many companies (some of their price targets indicate they haven’t looked at a company in months); institutions are limited in how much they can buy in most of the small to medium cap companies I look for; money managers are usually too afraid to suggest high volatility stocks to their clients; and many investors completely disregard nearly every high growth stock based on valuation unless it is a well known consumer facing company like Netflix or Amazon. By being focused and knowing more than almost all individual investors and probably many institutional investors, I think I can come out ahead.

It doesn’t take an MBA to understand the numbers I provided for AYX and see how good of a business it is. It might take one to understand the earnings reports for much larger, diverse companies which is why I try to stick with smaller, focused companies with an easy to understand financial outlook.

I think most people would agree that the business prospects for AYX are fantastic. There may be little quibbles here or there (slowing rate of customer growth or risks due to lack of a cloud based product) but for the most part the differences come down to valuation. Many will look at a P/E over 100 and completely ignore it. Others will say a P/S or P/EV of 15-20 is too high and that any growth is priced in. I have found that the biggest winners are always “overvalued” so I don’t usually pay too much attention to it unless it hits mainstream like Zoom. I understand a slight hiccup could mean a 20-50% drop in share price but I am willing to take that risk for the much greater rewards. When a stock is up 3-5x in a few years like NVDA, you’re still well ahead of the game even with a 50% drop.

Anyway, just my opinion. If I wanted to save myself a few hours a week of research I’d just buy the total market or S&P 500 and just delete the financial apps from my phone. I personally feel that investing based on a qualitative feel for a company or general market themes leaves you in the same boat as the vast majority of individual investors and well behind institutional investors in terms of knowledge, so it’s hard to be better at picking companies than the rest of the market.

[fatlittlepig]

I would highly recommend against investing in individual stocks without at least studying the quarterly reports and general financial trends of the company, unless it’s with the expectation that it’s just for fun. Sure, having a good first hand experience with a product is nice but there is far more to a stock than just user experience and it’s difficult to pick stocks that will significantly outperform the indices by just going on themes. I do think it is easy to find stocks that underperform the market based on themes (industries being completely disrupted) so I guess theoretically you could just short those companies and beat the market, but I don’t have the courage to short anything.

In my opinion if one is going to invest a significant portion of his or her portfolio in individual stocks, you better be able to rattle off some metrics as to why it’s a good investment in the next few years. Whether it’s revenue growth, dividend yield, earnings growth, subscriber growth, growing margins, recurring revenue, etc. depends on one’s investing style. And unless you’re a money manager you likely can’t do that for more than 10-15 companies at a time. If you’re not going to know that level of detail for the companies you own, you’re better off in index funds or whatever broad market portfolio distribution you deem appropriate to your financial and professional situation.

I personally keep my wife’s portfolio in an S&P index and my own portfolio in a basket of individual stocks, usually 8-10 high growth companies. We also have some in her company ESPP and some in real estate. My portfolio has significantly outperformed the S&P over the past 5 years of actively managing my portfolio (about double the rate of return, 20% to 10%, and +5% YTD compared with -12% for the S&P), but it requires significantly (technically, infinitely) more work, risk tolerance, and willingness to make/live with decisions.

As to an individual stock tip, for the next 3 years I like Alteryx (AYX). Enabling less technical (i.e. less expensive) users to perform code-free complex data analysis and visualization for about a third of the Global 2000. Less than $8 billion market cap, accelerating revenue growth >70% last quarter, 90% gross margins, cash flow positive, and significant recurring revenue with 130% dollar based net expansion rate, growing customer count 30% year over year, founder led, in a rapidly growing market. Their bottom up marketing approach makes it easy to get a foot in the door of larger companies and prove their worth. The next quarter or two may bring some uncertainty but if not bought out by MSFT or something they should grow significantly. Disclosure, I am invested in AYX.

so you think your abilities to analyze companies leads to an ability to select stocks that outperform the market? my stocks have outperformed the market, but i definitely do not think it is because of ability to analyze a company's balance sheets. The problem is two equally intelligent people will look at the exact same data (revenue growth, dividend yield, earnings growth, subscriber growth, growing margins, recurring revenue blah blah) and come to exact opposite conclusions.

[mgchan]

I’ll be the first to admit, I’m a very unsophisticated investor. I didn’t study the balance sheets and I don’t know much, I do know that I’ve been on a carnival cruise and I did like it. I think once the coronavirus epidemic blows over, life will return to a new normal, people will go on cruises again, cruise companies will become profitable again, earnings will increase, stock valuations will follow, and fatlittlepig will hopefully make a few bucks, and people will look back at the stock chart and say man I wish I bought carnival at 9 dollars..

I would highly recommend against investing in individual stocks without at least studying the quarterly reports and general financial trends of the company, unless it’s with the expectation that it’s just for fun. Sure, having a good first hand experience with a product is nice but there is far more to a stock than just user experience and it’s difficult to pick stocks that will significantly outperform the indices by just going on themes. I do think it is easy to find stocks that underperform the market based on themes (industries being completely disrupted) so I guess theoretically you could just short those companies and beat the market, but I don’t have the courage to short anything.

In my opinion if one is going to invest a significant portion of his or her portfolio in individual stocks, you better be able to rattle off some metrics as to why it’s a good investment in the next few years. Whether it’s revenue growth, dividend yield, earnings growth, subscriber growth, growing margins, recurring revenue, etc. depends on one’s investing style. And unless you’re a money manager you likely can’t do that for more than 10-15 companies at a time. If you’re not going to know that level of detail for the companies you own, you’re better off in index funds or whatever broad market portfolio distribution you deem appropriate to your financial and professional situation.

I personally keep my wife’s portfolio in an S&P index and my own portfolio in a basket of individual stocks, usually 8-10 high growth companies. We also have some in her company ESPP and some in real estate. My portfolio has significantly outperformed the S&P over the past 5 years of actively managing my portfolio (about double the rate of return, 20% to 10%, and +5% YTD compared with -12% for the S&P), but it requires significantly (technically, infinitely) more work, risk tolerance, and willingness to make/live with decisions.

As to an individual stock tip, for the next 3 years I like Alteryx (AYX). Enabling less technical (i.e. less expensive) users to perform code-free complex data analysis and visualization for about a third of the Global 2000. Less than $8 billion market cap, accelerating revenue growth >70% last quarter, 90% gross margins, cash flow positive, and significant recurring revenue with 130% dollar based net expansion rate, growing customer count 30% year over year, founder led, in a rapidly growing market. Their bottom up marketing approach makes it easy to get a foot in the door of larger companies and prove their worth. The next quarter or two may bring some uncertainty but if not bought out by MSFT or something they should grow significantly. Disclosure, I am invested in AYX.

[Max Power]

Anybody want to share an individual stock tip on the next amazon or google?....

Google probably is the next Google.
They own the world's #1 and #2 (YouTube) search engines, they have info and stats and web traffic control worth trillions, they sell ads much better than FB (widening the gap every year), they have GoogleMaps, -Mail, -Business, -Duo, -Translate, -Flights, -Shopping, etc etc etc. Oh, and they're also pretty widely considered to be leading the self-driving tech race too. Amazon and Facebook could be unseated or diminished by strong competition (Baba, Target, WalMart, random social media or shopping upstarts, etc), but Google really can't. Right now, it is basically impossible for anyone to go a single day without using Google in some form, and you can still get them for nearly a third off what they traded at a couple months ago.

People seem obsessed with finding stocks that will potentially 2x, 4x, 10x, etc by the end of the year and reach for distressed companies (seems to be the main topic here in this thread), popcorn kernels that never pop, etc. A lot of the best picks are just the obvious ones... mega cap, DOW, etc. There is no need to go to the ends of the Earth to find a good buy in bear markets; if they outperform the S&P, that is a win. They are basically all at lows even though the companies haven't changed a bit since the beginning of the year (many will just have zero or low profits for Q2), so you really can't go wrong. If there is one thing the CoronaCrash will do, it's that it'll probably let savvy and brave investors who buy even harder (index, singles, or whatever) retire 5-15years earlier.

[Lordosis]

Abbott and Ortho clinical look like the first to roll out antibody testing. Both are down YTD

[Perry Ict]

I would be very careful with investing in common equity in any company that has a reasonable chance of bankruptcy.

Even if there is a bailout in the aviation industry, equity is usually wiped out (eg GM in 2009).

At some stage, the distressed debt and bonds in these companies maybe worth a punt. If they survive you pocket 20% p.a yield. If they go BK, depending on the bankruptcy, you end up with a variable amount of equity in the entity coming out of BK.

Howard Marks has written some good books and articles on distressed debt investing and the whole area of vulture hedge fund investing is interesting. I’m not sure we have anywhere near enough information as individual investors to have a good chance of successful investment in this area, although the potential returns seem eye popping.

It would seem to me that medium or long term investing in common equity of airlines and cruise operators is very high risk knife catching at this point in time.

I agree with you. I've made a few small investments in this market that were speculative (including JETS etf) with small amounts of money that, like FLP, I'm willing to lose if it doesn't work out. But overall, I like the idea of investing in relatively diverse funds that are composed of many companies. If we invest a lot of money in a total stock market fund, we might not catch the bottom, and maybe we lose 30-50% or more before eventually getting most of it back. But when investing in individual companies, there's no floor, those stocks can go to 0. If I weren't an amateur investor and knew more than I do, I might take a bigger risk on those cheap stocks. But at this point, most of my investments will aimed at the more diverse funds.

[fatlittlepig]

I’ll be the first to admit, I’m a very unsophisticated investor. I didn’t study the balance sheets and I don’t know much, I do know that I’ve been on a carnival cruise and I did like it. I think once the coronavirus epidemic blows over, life will return to a new normal, people will go on cruises again, cruise companies will become profitable again, earnings will increase, stock valuations will follow, and fatlittlepig will hopefully make a few bucks, and people will look back at the stock chart and say man I wish I bought carnival at 9 dollars..

[Dont_know_mind]

The administration has made it pretty clear that they are going to prop up the airline industry. The cruise line industry is a little different. The amount I'm investing, I'm perfectly willing to lose it all and will hold on for 10+ years if necessary, it's speculative.

Maybe. But it maybe wishful thinking that equity holders will not get wiped out (or massively diluted).

Jets is a good idea, but for me only after a few bankruptcies, which have not occurred yet.
It is about as attractive to me as HYG currently. Too early IMO.

Carnivale, very high risk. Way too early IMO. I think it will go bankrupt. I could be wrong. Not a gamble I’d want to take this side of BK.

I set a high bar for wholesale liquidation. That is the only time we have an edge over institutions.

Carnivale restructured out of BK would be considered uninvestable and that would interest me.

My only edge is patience. And stubbornness not to buy until I see extreme value.

Maybe I’ll miss some opportunities.

Behaviourally, I find I have to slow everything down as much as possible to reduce the risk of error.

As an active investor, I believe you only need to make 4 or 5 good investment decisions in your lifetime to do really well.

[fatlittlepig]

I would be very careful with investing in common equity in any company that has a reasonable chance of bankruptcy.

Even if there is a bailout in the aviation industry, equity is usually wiped out (eg GM in 2009).

At some stage, the distressed debt and bonds in these companies maybe worth a punt. If they survive you pocket 20% p.a yield. If they go BK, depending on the bankruptcy, you end up with a variable amount of equity in the entity coming out of BK.

Howard Marks has written some good books and articles on distressed debt investing and the whole area of vulture hedge fund investing is interesting. I’m not sure we have anywhere near enough information as individual investors to have a good chance of successful investment in this area, although the potential returns seem eye popping.

It would seem to me that medium or long term investing in common equity of airlines and cruise operators is very high risk knife catching at this point in time.

The administration has made it pretty clear that they are going to prop up the airline industry. The cruise line industry is a little different. The amount I'm investing, I'm perfectly willing to lose it all and will hold on for 10+ years if necessary, it's speculative.