I haven’t owned Axon for a long time but last time I checked Axon was trading around 100x NTM EPS, which is really expensive with EPS expected to grow at around 25-30% for the next few years. Good company, expensive stock.
In my humble opinion, that is the biggest weakness of the board in general - not enough focus/discussion on valuation and the buying of stocks that are way too expensive. Not only is the upside limited on a crazy expensive stock, when a bear market comes, the stocks fall very, very hard. I learned my lesson from 2021-2022 and have completely changed course, I now look at valuation very closely.
TTD is another example - great company but too expensive to own at this point. I don’t think stocks trading at something like 50x NTM EBITDA where EBITDA is only growing at 30% are likely to make a lot of $$$.
When the EBITDA growth over next 2-3 years is 2x higher than NTM EBITDA multiple, then a stock is likely very undervalued, and it may be time to back up the truck.
For example, TMDX NTM EBITDA multiple is roughly 0.5x higher than the expected EBITDA growth rate so there is a lot of potential upside and it is one of my larger positions.