So I know that “relative valuation” is not a focus for what to invest in for this board. But I also think that CRWD’s and SNOW’s most recent phenomenal quarterly results, without much of a stock price bump at all, seem to show that the market thinks these companies are potentially fully valued at their current price point and that performance expectations are also extremely high. I also think that any perceived miss, or more of a slowdown than expected, would hit the stock price of these two highly valued companies more than most (luckily they haven’t missed much of anything in their results).
I’m not saying there’s no stock price gains to be had anymore in these names, they’re growing fast enough, that they could gain 40-50% in a year, and still have their valuation slowly come down over that time. I do however think that other names without such lofty valuations already (yet have similarly stellar growth metrics) have a much better chance of giving larger gains as their multiples have much more room to increase. I believe that’s why UPST was able to double in this past month, FUBO has done similar, DOCU has popped 17% today with great results (but nowhere near as “great” as either CRWD or SNOW, but also not the same expectations priced in).
I won’t be exiting CRWD (and I’ve never purchased SNOW because of said hyper-valuation), but CRWD is currently my largest position (20%), and I’m very comfortable that my money is pretty safe there (unless they were to have a high profile hack occur), but I think I will look for some non-taxable shares that I can reduce my position maybe to 12-15% to put that 5-8% in some other names with what I feel will give me more potential for gains because they’re not so highly valued (FUBO, APPS, DOCU, maybe even PTON come to mind).
Anyone else feel similarly?
(Disclosure: I own all stocks mentioned except SNOW and APPS, but will probably be adding a position in APPS soon.)
Similarly I have been reducing my CRWD and sold all my TDOC, MDB, ETSY, VEEV the last month. I still love these companies but Mr. Market is telling us that they are fully valued and must grow into their price. So the near term upside seems a bit muted going forward in 2021.
I am adding this freed money slowly to MELI, PINS, and ABNB. These are all under valued IMHO. And my biggest holdings are still ROKU and SE. These two stocks are not fully understood by Mr. market as their revenue models are a bit complex to understand. As such they have a lot of room to run.
I also recently bought 1/2 position in UPST at $105 but paused buying because of its fast move up. Kind feel like a deer in the headlights if I buy more today at $179. Thx for this board for deep diving and highlighting UPST. Now days I do not want to see MF recommend a stock until I have a full position. MF is so big now they/we are moving markets. The little ole fool kingdom that I joined in 1994 is now a world power. sigh…
I am also doing my own deep dive into SWAV versus NARI, both medical device companies that improve blood circulation. I own both but have had superior stock performance in SWAV. I intend to buy more but which one? Maybe I’ll post my thoughts here once I am done.
I won’t be exiting CRWD (and I’ve never purchased SNOW because of said hyper-valuation), but CRWD is currently my largest position (20%), and I’m very comfortable that my money is pretty safe there (unless they were to have a high profile hack occur), but I think I will look for some non-taxable shares that I can reduce my position maybe to 12-15% to put that 5-8% in some other names with what I feel will give me more potential for gains because they’re not so highly valued (FUBO, APPS, DOCU, maybe even PTON come to mind). Anyone else feel similarly?
foodles
Since you ask I will volunteer a concurring opinion. I’ve been pondering this very question for a while trying to anticipate the sequel to the inevitable slowdown.
Candidates I have under consideration as alternatives for growth are Lightspeed, Twilio and ZS .TWLO and ZS have shown accelerating growth of late. LSPD has been much discussed .Upstart is also a candidate, or was before its price exploded to the point where its now my nearly largest holding.
I dont have the impression that the recent acceleration in growth in DOCU will be sustained during the balance of this year. But of course Docusign like many of the names we kick around will do very well. The issue as you have identified it is how well, and how will it compare to CRWD or other companies.
SNOW is flat since IPO 9 months ago, CRWD since December 6 months ago. Questions like this popping up here may indicate that the period of consolidation will be over rather sooner than later.
Buy the stocks with highest growth combined with superior business model and unit economics, and you will do very well as Saul has been proving for decades. I don’t see why you would sell these top companies because they have gone nowhere in 6-9 months (after triple digit returns the year before), that’s not a reason to change your investing strategy and move to inferior companies. Money transfers from the impatient to the patient. Just my 2 cents.