What if? looking at 30% 1yr growth...

Pure musings with a made up methodology so feel free to ignore.

I’m trying to get some sort of objectivity the “where should I put cash now so I can (likely?) make 30% in the next year” question, and actually see what that looks like, in terms of EV, market cap, price …

Method

Grab 3 EV/S points (80%, 90%, 100% of current - so three lines per ticker). Work out what revenue would look like if EV goes up (as share price increases by 30% discounted by number of shares issued), and whether that revenue increase actually looks ‘reasonable’. ‘Reasonable’ is defined as the required revenue growth < TTM revenue growth.

According to this methodology, AYX is my best bet (from the little list below) for 30% growth, even if EV/S contracts to 19.8. It seems ‘reasonable’ that AYX could be a $10b company in a year with a stock price of $117.

Note: This doesn’t look at the possibility of EV/S ratios getting bigger, so ¯_(?)_/¯
Note: TWLO is a bit screwed because of the massive increase in shares for SendGrid.

Any thoughts?

cheers
Greg

It’s always slightly terrifying posting actually numbers, so let me know if I’ve got anything wrong :slight_smile:


ticker	$	F$	EVS	F_EVS	EV	Mcap	?Rev	RevTTM	?Shares	F_Mcap	F_rev	F_?Rev	likely?
ROKU	108.6	141.18	14.42	11.54	11.72	11.95	48%	812.59	11%	17.29	1479.19	82%	FALSE
ROKU	108.6	141.18	14.42	12.98	11.72	11.95	48%	812.59	11%	17.29	1314.84	62%	FALSE
ROKU	108.6	141.18	14.42	14.42	11.72	11.95	48%	812.59	11%	17.29	1183.36	46%	TRUE
SQ	78.57	102.14	9.13	7.3	32.76	32.98	48%	3588.93	6%	45.62	6217.89	73%	FALSE
SQ	78.57	102.14	9.13	8.22	32.76	32.98	48%	3588.93	6%	45.62	5527.02	54%	FALSE
SQ	78.57	102.14	9.13	9.13	32.76	32.98	48%	3588.93	6%	45.62	4974.32	39%	TRUE
SMAR	53.35	69.36	29.96	23.96	5.32	5.53	60%	177.72	0%	7.19	291.42	64%	FALSE
SMAR	53.35	69.36	29.96	26.96	5.32	5.53	60%	177.72	0%	7.19	259.04	46%	TRUE
SMAR	53.35	69.36	29.96	29.96	5.32	5.53	60%	177.72	0%	7.19	233.14	31%	TRUE
NTNX	24.96	32.45	3.27	2.62	4.06	4.55	12%	1240.02	11%	6.58	2327.6	88%	FALSE
NTNX	24.96	32.45	3.27	2.94	4.06	4.55	12%	1240.02	11%	6.58	2068.98	67%	FALSE
NTNX	24.96	32.45	3.27	3.27	4.06	4.55	12%	1240.02	11%	6.58	1862.08	50%	FALSE
MDB	160.86	209.12	27.92	22.33	8.6	8.85	68%	308.18	7%	12.32	540.68	75%	FALSE
MDB	160.86	209.12	27.92	25.12	8.6	8.85	68%	308.18	7%	12.32	480.61	56%	TRUE
MDB	160.86	209.12	27.92	27.92	8.6	8.85	68%	308.18	7%	12.32	432.55	40%	TRUE
ZS	84	109.2	36.92	29.54	10.08	10.43	60%	272.9	0%	13.56	447.05	64%	FALSE
ZS	84	109.2	36.92	33.23	10.08	10.43	60%	272.9	0%	13.56	397.38	46%	TRUE
ZS	84	109.2	36.92	36.92	10.08	10.43	60%	272.9	0%	13.56	357.64	31%	TRUE
TTD	249.03	323.74	21.14	16.91	10.84	10.98	51%	512.61	5%	15.02	879.96	72%	FALSE
TTD	249.03	323.74	21.14	19.03	10.84	10.98	51%	512.61	5%	15.02	782.18	53%	FALSE
TTD	249.03	323.74	21.14	21.14	10.84	10.98	51%	512.61	5%	15.02	703.96	37%	TRUE
OKTA	137.12	178.26	34.62	27.7	15.26	15.39	53%	440.86	10%	21.99	789.54	79%	FALSE
OKTA	137.12	178.26	34.62	31.16	15.26	15.39	53%	440.86	10%	21.99	701.81	59%	FALSE
OKTA	137.12	178.26	34.62	34.62	15.26	15.39	53%	440.86	10%	21.99	631.63	43%	TRUE
TWLO	147.46	191.7	23.78	19.02	17.93	18.22	71%	754.09	14%	27.12	1410.32	87%	FALSE
TWLO	147.46	191.7	23.78	21.4	17.93	18.22	71%	754.09	14%	27.12	1253.62	66%	TRUE
TWLO	147.46	191.7	23.78	23.78	17.93	18.22	71%	754.09	14%	27.12	1128.26	50%	TRUE
AYX	117.78	153.11	24.79	19.83	7.11	7.28	87%	286.77	3%	9.77	484.38	69%	TRUE
AYX	117.78	153.11	24.79	22.31	7.11	7.28	87%	286.77	3%	9.77	430.56	50%	TRUE
AYX	117.78	153.11	24.79	24.79	7.11	7.28	87%	286.77	3%	9.77	387.5	35%	TRUE

8 Likes

At the beginning of this year Nutanix was supposed to be my big gainer for the year due to its relatively low valuation.

I also sold Okta at 110 because growth was slowing and I felt it would get hammered on the next er due to its high valuation.

Despite these bonehead moves my IRA is up 77% this year.

My point being valuation is next to worthless when predicting short term movements such as 1 year. And getting lists and ranking them by p/s to see which stocks have the most gas in the tank in the short term seems to be the modus operandi of a good majority of investors out there. There is so much more to look at and it’s better to not be doing the same thing everyone else is.

28 Likes

Thanks for that. I agree that ranking by P/S is next to meaningless. What I’ve tried to do is to paint some basic “what needs to happen if the price is going to rise by 30%” scenarios, and then put some kind of line in the sand to think about (the ‘likely’ column).

For example, this basic analysis says “Nutanix needs to grow revenue by 50% at the same EV/S and its TTM growth is 12%… how likely is that given my understanding?”. Obviously, if they did manage a higher growth rate, that would feedback into the EV/S, but I can then go… actually, given what I know about Nutanix, I think that is/isn’t likely [I think it’s unlikely in the next year, but possible]

re: your “bonehead moves”, selling out of Okta because growth is slowing seems pretty rational to me.I’ve made many more bonehead moves!

cheers
Greg

9 Likes

Yeah, I am the king of bonehead moves.
Uranium recently.
Pot stocks? no problem losing there.
Solar energy? Count me out at a big red loss.
All the other “maybe winners”? That’s my middle name.

Except… . .for ENPH.
That and my Saul Index has me up 86% YTD.

I continue to preach the Saul Et Al Gospel wherever I go in my travels.
Emailing Saul links today to 2 ladies I met dancing.
Both as dumb as me when it comes to stock.

1 Like

Okay guys, posts made up of long lists of stocks with numbers after them are Off Topic for this board to start with, but this thread is degenerating further from there. PLEASE END THIS THREAD NOW. THANKS.
Saul

15 Likes

posts made up of long lists of stocks with numbers after them are Off Topic

This is so concise and so correct. Thank’s Saul!

1 Like