Constellation Software is a great, great stock which I own since 2012. At the time I bought it, the stock was selling for about 90$. Today, it's selling for about 720$. It's my homerun. It's an 8 baggers.
But even if I've had a 8 baggers with that stock, I still haven't found what I'm looking for in this life. It's so sad to realize that an 8 baggers doesn't make you happier.
Maybe if it gets to a 10 baggers, I will finally see life differently. I gotta keep the faith. Otherwise, fuck, what will it take to be happy? I think I will fall off a cliff if that 10 baggers target doesn't have a positive impact on my mind.
Everything you've read about Constellation Software is true: It's a wonderful business that has everything you're looking for: A high ROE, very nice cash flows which are growing steadily, a nice growth in earnings year after year, a low beta, high insider ownership and more... If you find a business with a similar profile, just buy it now. If you have a coffee on one hand and a baby around your arm, just leave them fall on the floor and go in a hurry to your computer to buy this stock while your baby and your boiling coffee are meeting on the floor.
The only problem with Constellation Software is that it's very expensive. The price you have to pay today is 28 times next year's earnings. I know that a lot of great
stocks are selling for such a price or more than that. For instance, Mastercard is
selling for about the same ratio (PE of 28) and it has a very high ROE like
Constellation Software. But it's not because everybody is willing to pay
a high price that they're right.
Constellation Software is now a medium/large cap (15B$ market cap) and the PE is high. At such a high multiple, I don't think the stock will double in the near future. I think we could expect about a 10% return every year, but with a lot of volatility because at 28 times earnings, that stock should be volatile to any slight bad news.
I've trimmed a bit my position this week. But I won't sell it entirely. It's a too good stock. But it's probably unwise to have a large part of a portfolio on that expensive stock. I believe there's a limit to a multiple's expansion and CSU is close to that limit.