I have some cash funds that as of last Friday are available for me to deploy. Given today’s somewhat of a down day for Saul stocks, I was wondering which ones people would suggest me either adding to or starting a position in.
Mongo being so far away from its 52wk high makes it attractive.
Took the opportunity today to rebalance and figured I’d share a couple of alternate ideas that don’t get too much play but may be of interest.
PagerDuty PD. I love their optionality and developer first approach. Compressed valuation with superior margins and near 50% growth.
eHealth EHTH. Accelerating growth as the online platform to signup for Medicare and Medicaid. Went from 60% to 100% growth recently. I’m working on a deeper dive.
I also added to MDB following the Amazon announcement as well as today’s retreat. They are 20% off ATH. I hate their guidance and warning of tough comps coming up for short term gains going into ER, but AMZN concessions removed all FUD for me. Lesson learned.
MDB been flat for about 4 months since their big March post-ER pop.
Their P/S finally fell even or under AYX and ESTC. I added to MDB today.
I also added to NOW. They had a great ER, a more conservative P/S compared to most, and they are a true SaaS titan and I think they have a few years of 30%+ growth still left which will allow you to keep same P/S and get price appreciation more in line with growth.
I also added back a small amount of TWLO. Not as bad as MDB, but they have been more muted the past few months, and with at least 2 more Q’s of big y/y gains to report, thanks to SEND acquisition, I think they have a couple pops left in them. They are on a short leash with me, as they are not a small cap anymore.
TTD is only back to Thursday prices, so not really a discount. Same with ESTC. Those are my two highest allocations, so I didn’t bother adding more.
CRWD dipped quite a bit, but also ran up so much recently…so I held off. I sold out last week, figuring I could get back in later. I just think they, like with ZM, are too big in terms of market cap compared to TAM…too much of the future priced in.
I added some more to BZUN. The trade war makes this a fickle in/out trade for me, but since we are in middle of a truce and meetings this week, I am hopeful the stock trades on fundamentals. This is a China ADR, and not something Saul likes. Risky, fwiw.
A new stock on my watchlist was EXAS that was down double digits and has recovered…they just reported 90%+ growth. I don’t know enough about them to understand why they are punished, as biotechs in not my strength.
Yes, MongoDB seems like a great opportunity and I did add to my position today.
Amazon announcement saying they are joining (again) rather than taking away business shows MDB is still getting folks on Atlas, and AWS is seeing some of that for sure.
After reading the excellent post on Square I decided to start a position.
If TTD gets low enough I might add due to the excellent counter point on the Square write up.
If TTD gets low enough I might add
I thought the same thing about ZS when it blew past $70 on 5/10.
I finally decided today that I am tired of waiting for it to drop and bought it at $83.50 - now enjoying a little 2% daily gain. Would certainly have preferred the 20+% gain if I had pulled the trigger in May.
I also added to TTD today. Thankfully, I did not wait for a special buying price on it when I bought it on 5/9 and am enjoying the 40% gain on it after 2 1/2 months.
Today was a great buying opportunity. I sold off all of my remaining AAPL to either start positions or add to them, including MDB and AYX.
If TTD gets low enough I might add
Personally if I hadn’t already reached a full position in TTD I would be scooping it up. At 8% (or what was an 8% holding), I have other top up priorities.
What to buy today?
Well I swapped out my Arista Networks (down 1% at the time), to load up on:
MDB ~ $145 and take this towards a 5% holding
EXAS ~ $104 and get a starter position of 1% established
NVTA ~ $25 and again get a starter position of ~1% established
Whilst at the time I was very happy about getting some MDB at 145 so far from the 52 week high and at a reasonable valuation proportion. However the Exact Science (EXAS) purchase proved to be the buy of the day.
A beat and beat on their results with 100% growth rate with an $800m run rate company is outstanding but to top that they announced the acquisition of Genomics Health - one of the global leaders in cancer genetic testing for $2.8bn to create a $1bn run rate company at ~$20bn market cap and cement a true global leadership position in genetic testing. Genomics Health’s results were also a beat and beat with accelerated growth. The acquisition rationale was less about the cost synergy more about the revenue synergy, shared infrastructure platform, customer relationship synergy and earnings synergy.
The share price dropped back from 117 to 101 and returned to 117 by end of day and then moved higher to 120 after hours. Clearly the analysts warmed to the results and the merger as the day went on.
I started a position in CrowdStrike yesterday. I was silently kicking myself for not getting in before the ER and saw yesterday as maybe a chance to get a toe in the water. I’m saying “maybe” because even though today’s price action seems to show it was a smart move, I am actually taking the idea this is a bubble seriously.
Look, I get the arguments put forward by Saul and others why the valuation of these companies is justified. And I agree with those arguments. I’m just not sure ‘how far’ I agree with it. That’s why I just have a few small positions in companies brought forward by this board. And they are all security related, as I think growth-wise I think SaaS + security is a double whammy.
Usually though, when an investor or a small community of investors (I don’t actually know the size of this community in terms of ‘total net worth’) has a leg up on the overall market, the market tries to prove you wrong until it can no longer. When it can no longer, it will show lemming behavior and all jump on the bandwagon in FOMO mode until stocks get way overvalued.
The longer the current can-do-no-wrong situation lasts, the more we’re going to be inflating the bubble. That doesn’t mean we’re necessarily in a danger situation. Yet. Just be prepared for some of these stocks to drop. A lot. And the truly successful companies will see their stock recover subsequently. But it may take patience. And some may never recover. Which is OK, we could still come out ahead.