dimanche 1 novembre 2020

Two new stocks: CDNS and FICO

 Quebec City is a beautiful place. It's surely part of the Top 3 most beautiful cities in Canada. 

The problem is that some of the worst tragedies in Canada have happened here in the last few years. In 2017, it was Alexandre Bissonnette who shot a lot of muslims. Yesterday, it was a 24 years old guy from Montreal that came to Quebec City to randomly kill two people and hurt about 5 people more with a sword during the Halloween night. Imagine that: the guy used a japanese sword to open the chest of a 61 years old woman then he sliced her throat without even knowing her. 

That's completely crazy. You must be pretty fucked up to use a sword to almost decapitate your victims. It requires a lot of determination to do that. Much more than to just shoot randomly with a gun without seeing your victim and feeling her guts with your weapon. 


Last week was a very red week. Red like a sword full of blood. All stocks went down a lot. And while many people seem to think that it's time to buy, let's remind that the stock market is more or less at the same level than it was at the beginning of the year (when the pandemic didn't exist) and that a lot of stocks related to tourism are still sold at a PE of 20-25 (Marriott, for instance, has a forward PE of 28). 

But, I think that we should stay ready for the right moment to buy which may come soon. Here's two names I've discovered when I screened the market yesterday: Cadence Design Systems (CDNS) and Fair Isaac Corporation (FICO).

Cadence Design Systems, Inc. provides software, hardware, services, and reusable integrated circuit (IC) design blocks worldwide. The company offers functional verification services, including emulation and prototyping hardware. 

Fair Isaac Corporation develops analytic, software, and data management products and services that enable businesses to automate, enhance, and connect decisions

Both are expensive but great stocks. Not too expensive though. They have qualities which qualify them as high quality stocks, which allows them to be expensive. That's how it works. Here's some numbers:


Stock performance in 2020: 67%

Stock performance over the last 5 years: 391%

Fwd PE: 38

Debt level: very low

Net profit margin: 28%

Average ROE: 30

Annual EPS growth last 5 years: 19%

estimated EPS growth next 5 years: 15%

Predictability: 95%


Stock performance in 2020: 29%

Stock performance over the last 5 years: 322%

Fwd PE: 39

Debt level: medium

Net profit margin: 18%

Average ROE: 60

Annual EPS growth last 5 years: 31%

estimated EPS growth next 5 years: 16%

Predictability: 85%

I like both stocks. I'll probably end up buying both if the market drops enough. And I'll perhaps buy them even if the market doesn't drop anymore. That paragraph has no value, finally. 

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