OT: revisit 1YPEG?

We are all growth investors on this board. And in light of the big rotation away from momentum, including our hyper growth stocks, maybe it is a good idea to have some diversification within growth investment.

I’m thinking one possibility is to combine SaaS stocks (if we continue to believe the underlying long term business thesis) with the previous generation of Saul stocks, based on the 1YPEG approach. Now, I am relatively new to this board, and have not been around when 1YPEG was the hot topic. So I’m just wondering: if we are to look at slower growth stocks with much lower valuation, say, based on something like 1YPEG, what stocks would have been strong candidates right now?

Bashuzi

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The times, they are a changing. To adjust is Saul’s winning trait.

This might be worth considering.

Cheers
Qazulight

I’m thinking one possibility is to combine SaaS stocks (if we continue to believe the underlying long term business thesis) with the previous generation of Saul stocks, based on the 1YPEG approach. Now, I am relatively new to this board, and have not been around when 1YPEG was the hot topic. So I’m just wondering: if we are to look at slower growth stocks with much lower valuation, say, based on something like 1YPEG, what stocks would have been strong candidates right now?

Bashuzi

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Funny that you should ask. Take a look at sketchers, one of Sauls picks before SAAS. It has done well.

Girdon

Although I am still learning quite a bit about many of the high growth/high margin/high retention/high valuation companies discussed on this board; I consider myself all-in and remain all-in on “Cloud” based technologies and the companies operating in that market segment.

My plan going forward, as we push through this rotation, is to become more educated about the “Cloud” and what the Cloud actually entails, identifying the faster growing sectors of the Cloud market and the leading companies within those sectors:

  • Cloud Business Process Services (BPaaS) CAGR = 7.47%
  • Cloud Application Infrastructure Services (PaaS) CAGR = 19.51%
  • Cloud Application Services (SaaS) CAGR = 15.78%
  • Cloud Management and Security Services CAGR = 14.28%
  • Cloud System Infrastructure Services (IaaS) CAGR = 25.89%

From a recent presentation I attended, according to Gartner (April 2019) the overall Cloud market will grow at 16.08% annually from 2018 to 2022; $182.4B to $331.2B worldwide. The CAGR rates for each of the segments, according to Gartner, are noted above.

As a fisherman, my fishing analogy is that if I was going to be looking for Cloud oriented, high growth, high quality companies, I would want to be fishing in the IaaS pond, the PaaS pond and the SaaS pond, in that order. It may sound rather simplistic; but that’s right up my alley.

I own quite a number of companies in this market segment already; perhaps many that would not make the cut for discussion on this board, but the first phase of my search is on for IaaS that demonstrate revenue growth, great margins, high retention and expansion rates and founder ownership.

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