Like all the incredible growth stories where there's little or no profit, I've been reluctant with Shopify. It's hard to get away from what you've learned from Warren Buffett and all the so-called great investors. Nobody advices to buy stocks where there's no profit.
But, even if nobody told us to invest in that kind of stock, Shopify's growth is truly incredible: revenues surged 97% during the second quarter. Now, that's a growth rate.
Plus, now, they make a little profit (36 million dollars).
And what about EPS?
Regular EPS: 0,29$
Adjusted EPS: 1,05$
Let's speculate that the EPS will be the same for the 4 quarters of 2020. Given that hypothesis, Shopify is sold for 1200 times regular earnings and 333 times adjusted earnings. Of course, growth will surely continue (so, the forward PE may be 50% lower than what I'm proposing, but that's still very high).
If a vaccine is found, will things slow down a lot for Shopify? If the pandemic continues, will numbers triple for Shopify? Who fucking knows? Who's got the fucking almanach for 2021?
All I know is that Shopify offers an incredibly high growth and is sold for an incredible high price. And I know that this kind of growth can't last for very long but it can also last for a couple of years...
mercredi 29 juillet 2020
lundi 27 juillet 2020
Intercontinental Exchange (ICE)
You were waiting for something new, something refreshing, something to make you experience some thrill?
Maybe I got something for you.
Intercontinental Exchange is a brand new discovery for me. I found it on my latest screening of the market. And it looked pretty interesting.
First of all, Intercontinental Exchange (ICE) owns and operates the leading global electronic marketplace for trading both futures and over-the-counter energy contracts and is the leading soft commodity exchange. For instance, about 50% of the world's traded crude and refined oil futures contract are hosted on ICE.
Performance last 5 years: 115%
Performance last 10 years: 326%
Forward PE: 21
Average ROE last 5 years: 12
Long term debt: low
Profit margin: 40% (which is VERY high)
Beta: 0,54
Annual EPS growth last 5 years: 16%
Annual EPS growth last 10 years: 16%
Stock predictability according to Value Line: 100%
Frankly, if we exclude the ROE which is a little low, every other metric looks great with that stock. Have you seen the net profit margin? About 40%. These margins beat about 99% of all stocks. And the predictability is also exceptional.
Of course, the sector is related to oil (everybody should stay away from natural resources), but it's first and foremost a techno company related to the trade of energy. And, even if everybody dreams of a world full of Tesla's, we'll probably have a lot of oil and energy in our economies for many years. Well, actually, we’ll probably need energy until the apocalypse.
So, I believe that this is an interesting find. A stock with a low beta, high growth, and high predictability is something we can rarely find and that’s exceptional.
Don't thank me. I live to give.
Maybe I got something for you.
Intercontinental Exchange is a brand new discovery for me. I found it on my latest screening of the market. And it looked pretty interesting.
First of all, Intercontinental Exchange (ICE) owns and operates the leading global electronic marketplace for trading both futures and over-the-counter energy contracts and is the leading soft commodity exchange. For instance, about 50% of the world's traded crude and refined oil futures contract are hosted on ICE.
Performance last 5 years: 115%
Performance last 10 years: 326%
Forward PE: 21
Average ROE last 5 years: 12
Long term debt: low
Profit margin: 40% (which is VERY high)
Beta: 0,54
Annual EPS growth last 5 years: 16%
Annual EPS growth last 10 years: 16%
Stock predictability according to Value Line: 100%
Frankly, if we exclude the ROE which is a little low, every other metric looks great with that stock. Have you seen the net profit margin? About 40%. These margins beat about 99% of all stocks. And the predictability is also exceptional.
Of course, the sector is related to oil (everybody should stay away from natural resources), but it's first and foremost a techno company related to the trade of energy. And, even if everybody dreams of a world full of Tesla's, we'll probably have a lot of oil and energy in our economies for many years. Well, actually, we’ll probably need energy until the apocalypse.
So, I believe that this is an interesting find. A stock with a low beta, high growth, and high predictability is something we can rarely find and that’s exceptional.
Don't thank me. I live to give.
vendredi 24 juillet 2020
Permanent stocks (july 2020)
I see some people always looking for the next big stock. Or people looking at some obscure names that aren't probably that solid but experience some good momentum.
These approaches seem to work well. Actually, a lot of people seem to do better with high-flyer stocks and obscure small caps than me with my not so original stocks.
I'm reluctant on selling a very solid and growing stock for a lesser known name that grows much more. Quality is as important as growth in my opinion and I'm probably wrong to think that way because the markets values much more growth than anything else.
Anyway, it's important to be comfortable with your approach, as good or as bad as it is. Actually, if you're comfortable with a bad approach, you're probably not very intelligent. But, as science tells us, intelligence is inversely proportional to happiness. So, you're probably an happy person.
A few years ago, I wrote a post about my "permanent stocks". Those were the stocks I expected to keep forever, or at least, for a very long time.. But things change. Pandemics happen out of nowhere and destroys business models. Managers do bad acquisition to keep on growing at any cost.
So, a permanent stock is, after all, not something that you should keep forever but something that, so far, did a great job. So, you're only as good as what you did until today. Make a very bad acquisition like Stericycle or, to a lesser extent, Dollar Tree and all the good job done until today vanishes. However, it's obvious that a company that did well over the last 10 years have much more chances to keep on doing well than a stock that did many mistakes. The trend is usually your friend.
My permanent stocks are as following:
Constellation Software
Alimentation Couche-Tard
CGI Group
Google
Facebook
Ross Stores
Mastercard
Visa
These approaches seem to work well. Actually, a lot of people seem to do better with high-flyer stocks and obscure small caps than me with my not so original stocks.
I'm reluctant on selling a very solid and growing stock for a lesser known name that grows much more. Quality is as important as growth in my opinion and I'm probably wrong to think that way because the markets values much more growth than anything else.
Anyway, it's important to be comfortable with your approach, as good or as bad as it is. Actually, if you're comfortable with a bad approach, you're probably not very intelligent. But, as science tells us, intelligence is inversely proportional to happiness. So, you're probably an happy person.
A few years ago, I wrote a post about my "permanent stocks". Those were the stocks I expected to keep forever, or at least, for a very long time.. But things change. Pandemics happen out of nowhere and destroys business models. Managers do bad acquisition to keep on growing at any cost.
So, a permanent stock is, after all, not something that you should keep forever but something that, so far, did a great job. So, you're only as good as what you did until today. Make a very bad acquisition like Stericycle or, to a lesser extent, Dollar Tree and all the good job done until today vanishes. However, it's obvious that a company that did well over the last 10 years have much more chances to keep on doing well than a stock that did many mistakes. The trend is usually your friend.
My permanent stocks are as following:
Constellation Software
Alimentation Couche-Tard
CGI Group
Ross Stores
Mastercard
Visa
jeudi 16 juillet 2020
A prediction
I'm not comfortable at all with that kind of prediction, but I'm betting on a drop of the market of at least 10% before the end of the year.
Positive view: A vaccine (highly improbable on the short term, and even if there's a vaccine, it won't be accessible for everyone in a short period).
Negative view: A pandemic that will continue at least until the end of the year, killing tourism and many small shops (highly probable until december).
Restaurants and bars are being reconfined in many places. I think that my prediction comes from these news.
Positive view: A vaccine (highly improbable on the short term, and even if there's a vaccine, it won't be accessible for everyone in a short period).
Negative view: A pandemic that will continue at least until the end of the year, killing tourism and many small shops (highly probable until december).
Restaurants and bars are being reconfined in many places. I think that my prediction comes from these news.
dimanche 12 juillet 2020
Why I don't follow anybody anymore (or almost...)
I'm a blogger since 2005. First, in french, then, 9 years later, in english.
I've always wanted to reach people, but I don't think I've ever wanted to be widely popular. Because, with fame, comes problems. And I have enough problems. Also, I never thought that I deserved admiration. Probably that I need some attention, but not more.
I'm suspicious of people who look too much virtuous or who tell their opinion too often on social medias. That's why I don't like Twitter that much. The media is mostly made for people to tell their daily opinion within a few sentences.And once they get 50 000 followers, they are famous. They are little pop stars, just like some Youtubers.
You find that kind of people in entertainment but also in finance. Actually, many people want to be someone, and, usually, being someone implies to be popular. Being on TV, on Twitter, Youtube or Instagram and having many followers.
Lately, in Quebec, we've seen a lot of denunciations of people in the music business being rude to women. Some have raped women, some have just been impolite or gross with them frequently (like taking their dicks off their pants and telling girls to suck it).
I think that power and popularity are very dangerous for a normal person. They make you think that you are very special and that there's some kind of divine light shining on you all the time. You take cocaine, you fuck one different girl each day, you eventually want something tighter so you try boys under 18, you become cocky, you think you're untouchable, your opinion sounds like something written in the bible and you start to frequent people like you...
You know what? I bet that 50% of the people widely popular that we follow on Twitter or that we listen to on TV are fucked up. That includes investors, which are famous for being degenerate people. Actually, we belong to the most degenerate category of people if we consider our hobby as a job.
I often say that we have to know what we do as investors. We have to be independant. Not just because it's important to understand how to pick a good company. But also because almost nobody on the media deserves to be trusted. Most of them lie to us to push their stocks and do some market manipulation. But mostly, they snort coke, fuck young girls and young boys and give them their herpes.
They could very well fuck your 14 years old daughter right now.
I've always wanted to reach people, but I don't think I've ever wanted to be widely popular. Because, with fame, comes problems. And I have enough problems. Also, I never thought that I deserved admiration. Probably that I need some attention, but not more.
I'm suspicious of people who look too much virtuous or who tell their opinion too often on social medias. That's why I don't like Twitter that much. The media is mostly made for people to tell their daily opinion within a few sentences.And once they get 50 000 followers, they are famous. They are little pop stars, just like some Youtubers.
You find that kind of people in entertainment but also in finance. Actually, many people want to be someone, and, usually, being someone implies to be popular. Being on TV, on Twitter, Youtube or Instagram and having many followers.
Lately, in Quebec, we've seen a lot of denunciations of people in the music business being rude to women. Some have raped women, some have just been impolite or gross with them frequently (like taking their dicks off their pants and telling girls to suck it).
I think that power and popularity are very dangerous for a normal person. They make you think that you are very special and that there's some kind of divine light shining on you all the time. You take cocaine, you fuck one different girl each day, you eventually want something tighter so you try boys under 18, you become cocky, you think you're untouchable, your opinion sounds like something written in the bible and you start to frequent people like you...
You know what? I bet that 50% of the people widely popular that we follow on Twitter or that we listen to on TV are fucked up. That includes investors, which are famous for being degenerate people. Actually, we belong to the most degenerate category of people if we consider our hobby as a job.
I often say that we have to know what we do as investors. We have to be independant. Not just because it's important to understand how to pick a good company. But also because almost nobody on the media deserves to be trusted. Most of them lie to us to push their stocks and do some market manipulation. But mostly, they snort coke, fuck young girls and young boys and give them their herpes.
They could very well fuck your 14 years old daughter right now.
jeudi 9 juillet 2020
Stratospheric debt
Have you seen the news?
Canadian deficit in 2020: 343 billion dollars (before the crisis, the government expected a deficit of 28 billion dollars);
Canadian debt in 2010: 524 billion dollars;
Canadian debt in 2015: 629 billion dollars;
Canadian debt in 2020 (expected): 1,2 trillion dollars.
Western countries (Europe and USA) are probably going the same way as Canada. In other words, governements won't be able to give candies to citizens for a long time. Actually, they'll probably have to cut some parts of their mission to concentrate on specific topics (healthcare and education... well, our almost free canadian education could become a little more expensive).
When I look at the market, I remember the PIGS. Do you remember the PIGS? About 10 years ago, the market went into a crisis because of Portugal, Italy, Greece and Spain. Their debt seemed out of control. And many people worried about them all around the world.
Frankly, what's the fucking impact of Greece and Spain among the world? What's their impact in Europe? France and Germany are probably responsible of 33% or even 50% of the economic force of Europe (excluding UK).
Now, almost every country is affected. Canada, United States, France, Germany, UK, and many others will carry a huge debt for many, many years. And the tourism industry is fucked for a while. Restaurants and bars will have to respect some heavy restrictions (no dancefloor, only 50% of capacity, closing time at midnight instead of 2 or 3 AM). So, many restaurants, hotels and bars will continue to go bankrupt. And tourists will stay home. There are a few like me who will go back to another country as soon as possible, but the majority will carry a trauma for a while.
So, now, the situation of the PIGS has exploded into a CUNT (Canada, United States, Nederlands, Thailand), a DICK (Denmark, Italy, Chile, Kenya) and a FUCK (France, United Kingdom, China, Koweit).
We'll surely face a lot of austerity in the coming years. Way less public investments in many fields. because governements will have to make choices.
On my last post, I wrote that every situation brings some occasions. Well, with this world full of debt, what would be the occasions that we don't see yet?
Please, share your vision in the comment section. If that fucking pandemic is hurting our economy and makes us poorer as a society, can't we at least become richer on an individual level?
Canadian deficit in 2020: 343 billion dollars (before the crisis, the government expected a deficit of 28 billion dollars);
Canadian debt in 2010: 524 billion dollars;
Canadian debt in 2015: 629 billion dollars;
Canadian debt in 2020 (expected): 1,2 trillion dollars.
Western countries (Europe and USA) are probably going the same way as Canada. In other words, governements won't be able to give candies to citizens for a long time. Actually, they'll probably have to cut some parts of their mission to concentrate on specific topics (healthcare and education... well, our almost free canadian education could become a little more expensive).
When I look at the market, I remember the PIGS. Do you remember the PIGS? About 10 years ago, the market went into a crisis because of Portugal, Italy, Greece and Spain. Their debt seemed out of control. And many people worried about them all around the world.
Frankly, what's the fucking impact of Greece and Spain among the world? What's their impact in Europe? France and Germany are probably responsible of 33% or even 50% of the economic force of Europe (excluding UK).
Now, almost every country is affected. Canada, United States, France, Germany, UK, and many others will carry a huge debt for many, many years. And the tourism industry is fucked for a while. Restaurants and bars will have to respect some heavy restrictions (no dancefloor, only 50% of capacity, closing time at midnight instead of 2 or 3 AM). So, many restaurants, hotels and bars will continue to go bankrupt. And tourists will stay home. There are a few like me who will go back to another country as soon as possible, but the majority will carry a trauma for a while.
So, now, the situation of the PIGS has exploded into a CUNT (Canada, United States, Nederlands, Thailand), a DICK (Denmark, Italy, Chile, Kenya) and a FUCK (France, United Kingdom, China, Koweit).
We'll surely face a lot of austerity in the coming years. Way less public investments in many fields. because governements will have to make choices.
On my last post, I wrote that every situation brings some occasions. Well, with this world full of debt, what would be the occasions that we don't see yet?
Please, share your vision in the comment section. If that fucking pandemic is hurting our economy and makes us poorer as a society, can't we at least become richer on an individual level?
mercredi 8 juillet 2020
Some great performers for the last 6 months
Today, the S&P500 is almost at the same level as it was at the beginning of 2020. Just like nothing happened.
However, some stocks are way more expensive now than they were 6 months ago.
For instance:
Zoom Video: up 265%
Tesla: up 196%
Shopify: up 155%
Etsy: up 145%
Wayfair: up 136%
Square: up 94%
Amazon: up 57%
The lockdown had a significant impact on the valuation (and, usually on the sales, also) of these stocks. Among that list, the only stock for which I don't see any relation between COVID and it's performance is Tesla.
Which means that even during a great crisis, we can find some occasions.
Another argument about not selling everything to wait for a better circumstances. There are circusmstances good for some stocks and bad for others.
However, some stocks are way more expensive now than they were 6 months ago.
For instance:
Zoom Video: up 265%
Tesla: up 196%
Shopify: up 155%
Etsy: up 145%
Wayfair: up 136%
Square: up 94%
Amazon: up 57%
The lockdown had a significant impact on the valuation (and, usually on the sales, also) of these stocks. Among that list, the only stock for which I don't see any relation between COVID and it's performance is Tesla.
Which means that even during a great crisis, we can find some occasions.
Another argument about not selling everything to wait for a better circumstances. There are circusmstances good for some stocks and bad for others.
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