Maybe its just me, but it looks like the Futures are pointing for widely scattered stock market pain tomorrow which leads me to speculating on whether there are bargain Growth stocks out there. But before you can determine that you have to take into account the Gold Rush of Big Rock Candy Mountain:
A few interesting data point on deaths by climbers on Mt Everest:
The Majority of Deaths on Mt Everest occur on the way down.
Sherpa Guides are more likely to die at lower elevations.
Why? It’s blamed on repetitive climbs on the dangerous and unstable Khumbu Icefall
- Paying Climbers are more likely to die at upper elevations.
Why? Once Climbers reach the Death Zone (26,000 ft or so) two things happen: 1) Their judgement becomes impaired; and 2) Zeal to reach the summit takes over and they begin to ignore their Sherpa Guides.
It is estimated that over 300 people have died attempting to climb Mt Everest. 200+ of those people still lay where they died and are sometimes visible to current climbers.
The most famous body still on the mountain was known by climbers as ‘Green Boots’. In some years with light snow cover climbers had to actually step over his legs on the trail.
So what has climbing Mt Everest got to do with Investing? Well…just the way I see it; but late last year Growth had its on sprint to the summit with company share prices skyrocketing. And just as most of us should have perhaps recognized the signs of Big Rock Candy Mountain danger - we didn’t. As a result a lot of portfolios have been killed on the way down.
The entire premise of The Big Rock Candy Mountain is that it is paradise. The Gold Rush up Big Rock Candy Mountain was the spectacular spike higher in Growth company share prices.
Note: The following represents a trick question:
So…to determine whether there are in fact mega growth stock bargains just laying around in the surf of the Nasdaq - it then figures that you might have to figure all that out by stripping out the Gold Rush Spike up The Big Candy Mountain. Seems semi-reasonable!
Lets take a few of examples
1)Example A: CRWD
CRWD Current Price: $205.62
All Time High: $298.48
Price Pre-Big Rock Candy Mountain: $233.78
% Below P-BRCM: -21.7%
% Below All Time High: -31.1%
Revenue Growth Latest Report: 63.%
BEAT on Revenue: 4.5%
Current EV/Sales FWD: 21.46
- Example B: DOCN
DOCM Current Price: $42.90
All Time High: 133.40
Price P-BRCM: $77.63
% Below P-BRCM: -41.9%
% Below All Time High: -67.8%
Revenue Growth Latest Report: 37%
BEAT on Revenue: Less Than 1%
Current Ev/Sales FWD: 7.59
- Example C: NET
NET Current Price: $95.22
All Time High: $221.64
Price P-BRCM: $127.19
% Below BRCM: 25.1%
% Below All Time High: -57.0%
Revenue Growth Latest Report: 54%
BEAT on Revenue: 4.7%
Current EV/Sales FWD: 32.73
- Example D: Mystery Company
Mystery Company Current Price: $122.78
All Time High: $412.68
Price P-BRCM: 312.80
% Below P-BRCM: -60.7%
% Below All Time High: -70.2%
Revenue Growth Latest Report: 54%
BEAT on Revenue: 9.5%
Current EV/Sales FWD: 4.74
I just made that whole Trick Question think up - there is no trick question. The entire point of this was only to point out that if anyone happens to be using % of price Below All Time High as some sort of barometer of what might - or might not be - a bargain then perhaps you are starting off on the wrong trail.
Oh - well, how about an attempt at a tricky question:
Tricky Question #1: From my data above - considering that I didn’t FUBAR it all up - can you determine which company is the better buy?
Trickier Question #2: Between Example C and the Mystery Company which one is a Center and which is a Shooting Guard?
All the Best,