Well, Paul, I do reserve the right to throw out a lot of the picks seen on that thread. I agree, though, a lot of people are just throwing out jazzy techstocks of any sort without the slightest effort to point to financials like cash on hand, Price/Sales, or (get this one) EARNINGS! Yep, I really like that earnings thing, amazing so many people don't care for them. :) It is going to be a lot of work for me to go through all of those stocks, but I am going to try. I can see right away that almost ALL of your picks would be on the shortlist for that thread. SGI (and Oracle I believe), though larger companies, merit serious consideration and are possibly worth putting in the basket.
Someone also mentioned why not just make it a CANSLIM thread. Fair enough but why give that O'Neill all the credit. He didn't invent growth stocks. But it's true that trying to "guess" the "N" aspect, areas that will contribute to hyper-growth...is the 'art' of stockpicking. So you try to pick a basket of companies that are first of all solid financially to provide a margin of safety and secondly which offer an above average chance of latching onto some huge earnings growth. However you usually pay through the nose through such companies so one of the best things to do is zero in on stuff that has been absolutely hammered due to some broad-based 'sectoral' or 'macroeconomic' fear. One thing Peter Lynch mentioned is that such bargains may be more prevalent outside the US because the market isn't as picked over. I agree, I believe this is why companies like Teledata and Hummingbird Communications will be good buys this year.
"Super Stocks"' criteria might be too strict. On the other hand, most people, it seems, can't be trusted to make an effort to weed out financially weak companies, preferring to recommend hot stocks because they like the story. Every once in a while, though, I see a story that sounds different...not just some questionable chip/board/drive/gadget maker that somebody thinks is great for some reason I don't understand. This is the good thing about the thread, you can see right away who has something to back up their hype, a little back and forth can be very informative & we need more of that. Example, I was asked to look more closely at KVHI after calling it a "boat thing". I did and I like it. Value and probable growth, also sound management.
I have access to a database of analyst reports and can get a feel for the companies' stories. In most cases the story is just too spotty and there is nothing compelling about it. Sometimes you find out some amazingly good things.
My lesson from all of this is that techs are probably the LEAST attractive place to find sound, undervalued companies. The hype more often than not overwhelms the fears. In other sectors fears abound where they should not...even amidst great growth stories...
But most of us will have to put stocks that are not "Super" in our portfolios. We might have to find some growth companies that we have good reason to expect to be fantastic for the next 10 years...and buy them at a P/E of 30, or even 40.
Sorry for the long ramble. |
