SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Bosco & Crossy's stock picks,talk area
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: tom pope who wrote (34766)10/19/2009 8:07:14 AM
From: Crossy  Read Replies (1) of 37387
 
Tom,
relative growth rates in the respective environment is one thing but pre-empting the next move of an industry is another. In the case of heat, its Price/Sales is almost 7. Typical for the industry is around 1. Absent growth (financial crisis) it can be 0.5 (where a couple of the US firms cited trade at right now)

IF you do the compounding you will realize it will take 5 year of 50% growth and a constant share price to get the valuation of EV/R of PSR=7 down to the industry normal of PSR=1. This leads me to the conclusion that there may be no value left to be captured here in the case of HEAT.

To me, situations like HEAT indeed are growth plays, but they lack my test of "GARP" .. Growth at a reasonable price.

Usually if I see an attractive industry or sub-segment and some high-growth outliers with similar rich valuation I use to wait and scan around for alternatives. Note that post chapter11 companies have typically very low EV/R ratios as they are lacking analyst coverage. But this is exactly what creates opportunities for far-sighted investors. I can remember nailing many of my best returns in such situations (with firms like NTLI, MPWR, IPSU, GMIL etc.) in all of these cases, the initial signal was a rock-bottom, below-industry normal outlier in EV/R and PSR

rgrds
CROSSY
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News