Marginal thinking update

A little over a month ago I had the harebrained idea to run the “hypothetical” HPE30 (the PE each company I own would have if they had a net margin of 30%). I’ll be the first to say, it’s more than rough, and works better for some companies than others.

That said, it’s not entirely useless, either. In fact, last time I identified Wix and Hubspot as potentially undervalued, and each is up since then. I thought it might be worth running it again and seeing what’s changed.

ticker	Nov17	Dec22
SHOP	59.3	59.0
ANET	41.0	41.4
WIX	22.1	23.2
HUBS	28.5	31.4
SQ	63.7	50.2
PSTG		12.6
ALRM	22.7	19.1
INST	23.4	22.4
TLND	29.1	26.6
HDP	18.3	19.2
NVEE		6.5
TDOC		34.3
MU		7.8
TTD	26.2	24.5

Shopify and Arista are right where we left them, pretty much. (Duh, because the shares are right around where they were on Nov 17.)
Wix and Hubspot look a little more expensive, but still quite attractive (esp Wix which is growing faster!)
As anyone who owns it knows, Square has fallen back to earth quite a bit – but it certainly still looks expensive here, yet less of an outlier than before.
Pure Storage sure does look like a bargain to me, as I had already decided.
Same for Alarm – their share price has fallen quite a bit (you know, I sometimes wonder if the .com in their name scares some investors off, something I’ve wondered with Stamps .com as well…but I digress)
NV5 might never have a 30% margin, so I kind of ignore this analysis for them.
Micron, as I’ve discussed, is off the charts cheap, but we know why.

In Summary
This seems to be a good visualization of valuation, but always more important is discerning WHY something is valued like it is. Square may get a premium because growth is actually accelerating…also no one wants to sell it and then see it get acquired the next week. Shopify is valued so highly because it’s growing like nothing else. Hortonworks, despite great growth, may not be valued higher because they’re still a long way from GAAP profitability. Etc.



Pure Storage sure does look like a bargain to me, as I had already decided.

Pure Storage is right up there with Alteryx and Talend amongst the companies that I plan to dig into more in the near future. Seeing how it measures out here aids it in that standing. I have several tabs open to learn more.

This page, blog post, and these 2 presentations are from less-than-independent sources, being straight from the company website:………

Latest earnings call transcript:…

Gartner quadrants analysis (link may not work, as I had to input some info first):…

Unrelated to anything associated with investing:
The .com worry made me think of this fellow who once ran for Governor of my state (and who lives in the same metro area as me; I once ended up driving behind him for several miles):

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I added to my Pure Storage last week on one of the down days. Would add more if I had the spare cash although I’m also intending to add to Micron.

Re-visiting this after recently purchasing some Pure Storage…I think I will be moving and up on my watchlist, maybe too, as it had a drop after last earnings (and is now being touted with the opening of Hidden Gems Canada as “the Shopify of Shipping”). Three different “.coms”.