Stocks to Watch Thread

Triplethreat said:

Marijuana has been very strong since Biden has been named President elect by the media. It's interesting because you can reasonably see it getting to a level similar to some beer/brewery levels of market share.

However I've always been rather tepid because Marijuana companies have had a hard time posting profits.

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Trulieve is an interesting one I’ve found that actually has positive earnings and surging revenue growth. I have a little baby position that I took based on not enough research to have more conviction, but it is on my list to research more. They’re primarily a Florida shop and have focused on winning that state rather than casting a wide net across the country

Happy to add more to Zoom. I think people are bigly overthinking this one.

People talk about expensive stocks all the time, but people said Zoom was expensive at IPO. If you would have bought at IPO your cost basis price to sales would be 11.9 using the TTM revenue. Yes 81 P/S on TTM is extremely rich, but it’s a company that just grew revenue 355% YoY and imo still has a very long runway.

The Wizard of Moz said:

Happy to add more to Zoom. I think people are bigly overthinking this one.

People talk about expensive stocks all the time, but people said Zoom was expensive at IPO. If you would have bought at IPO your cost basis price to sales would be 11.9 using the TTM revenue. Yes 81 P/S on TTM is extremely rich, but it’s a company that just grew revenue 355% YoY and imo still has a very long runway.

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Bigly lol...



That you????

Triplethreat said:

Bigly lol...

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That you????

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Yuge growth

Zoom (at $377.50) technically is right near its Fibonacci retracement of 38%.
If it doesn't hold here it could easily go to the next level of around $225.

Fundamentally, if they double revenue every year for the next three years that would put them at approximately $10 billion in revenues. Maybe they trade ten times revenues? That's basically right where the stock price is now.

A problem is that they are so big right now that they are not a buyout candidate for anyone except the largest companies in the world.
Now, Zoom could use its appreciated stock price to be an acquirer. That's what Google, Facebook, Amazon, etc. did.

But I love growth stocks and this fits the criteria of growth. You have to believe in the long term prospects of the company.

I'd bet on the companies hosting Zoom before I bet on Zoom themselves. Primarily Amazon, because of course, with Oracle second. I could see a world where AWS tries to drive up the price on Zoom, so they move to Azure, giving MSFT a little bump.

bigking777 said:

Zoom (at $377.50) technically is right near its Fibonacci retracement of 38%.
If it doesn't hold here it could easily go to the next level of around $225.

Fundamentally, if they double revenue every year for the next three years that would put them at approximately $10 billion in revenues. Maybe they trade ten times revenues? That's basically right where the stock price is now.

A problem is that they are so big right now that they are not a buyout candidate for anyone except the largest companies in the world.
Now, Zoom could use its appreciated stock price to be an acquirer. That's what Google, Facebook, Amazon, etc. did.

But I love growth stocks and this fits the criteria of growth. You have to believe in the long term prospects of the company.

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Good analysis here. Here’s some of my thoughts:

1. Their estimated revenue for fiscal year 21 (which they report 3Q21 earnings this month) is 2.37-2.39B. Doubling every year for 3 years would put them around 19B in revenue. That’s obviously extremely high growth, but this estimate is also likely Conservative for FY21

2. it is difficult for me to see Zoom trading for 10 P/S anytime soon. The lowest P/S they have traded at (source Macrotrends) is 28. Multiples compression back to 28 would put them at 532B at a revenue of 19B. Do I think that’s realistic? No I think that’s too high of a MV for such a high multiple. But even taking a P/S of 20 puts it at 380B, 361% upside from here

In a time where economic growth isn’t abundant, I think those companies that are growing impressively will continue to command high multiples.

also I think multiples expansion is appropriate (the degree to which is certainly a very difficult question!) when interest rates are so suppressed. As an extreme example, if interest rates were 12% (and let’s say inflation was 2% somehow) then I need some damn fine returns from equity to leave fixed income. If I’m using a discounted cashflow model then future earnings better be pretty damn high to beat my alternative. In a 0 rate environment bonds no longer serve as an income generator or a market defender. Couple that with for anyone using a DCF model that future cashflows are hardly discounted at all and it increases the intrinsic value of the stock

This market to me seems very similar to crypto in 2017. Back then people just trickled into any new coin. My friend who made and lost hundreds of thousands told me he literally bought every new offering for months. Never researched them, never needed to.

PLTR is the new hotness stock right now. I’ve seen several people say they bought just because they couldn’t stand missing out on another one and don’t know anything about the company. Retail call option activity is substantial which has caused dealers to need to hedge by continuously buying more shares which.... pushes up the price, attracts new attention, and reinforces more call options which then.... pushes up the price!

I have a position in PLTR. I looked at their earnings report and honestly wasn’t even that impressed, but I’m not too good to make money on anything and my strong belief was that this was going to keep attracting more attention for at least a few weeks

but then come in the people who just get drunk on koolaid. I have seen people call the stock cheap because of its price (gets upvoted like crazy, it’s scary how many people trade without knowing market caps), I’ve seen people call for 1,000 by EOY 2021 and claim it to be conservative (would make it the second most valuable company in the world after Apple)

I have seen all kinds of voodoo math to make the stock seem cheap. The fact is it’s a 60 P/S. Which I’m not going to sit here and say stay away as someone with some richly valued tech in my portfolio, but I will never call Zoom cheap. To me it’s just disingenuous pumping or people that really think that stocks only go up and they’ve found the key to everlasting wealth

maybe this time is different.
Some background on what I mean by the call options comment, this is a great video from September

Probably my favorite stock related tweet:

Tesla being added to S&P 500 this week. Index funds have to buy 120 million shares. I just saw this. Don't know if it'll go anywhere close to this, already ran up about 50% from when news was first announced. but the buying hasn't started yet.

It will come no where close to 1160

I think that’s a pure greater fools play hoping they can fling it to someone else if there is a big pump before theta takes it down to 0

Also as a huge holder of SPY I’m super bummed now 2% of my SPY is Tesla. Missed the entire run up to a 600B company but now thank God I get thousands of dollars worth of it when the risk/reward is absolute trash

For reference the contract has a bid of 0.01 which means with its open interest of 11,500 (from TD) that it has a market value of 11,500 dollars to this contract. Just people gambling imo

Also looking at the opposite side of the trade, a comparable open interest for Friday’s puts would be the 300 strike put with 11,890 open interest and a 3 cent bid.

I don't expect it to get close to that price either (I have some 630 calls), I wouldn't be at all surprised to see it run up to 700-750 range. I never have quite figured out if the index buy before the 21st or buy on the 21st.

Not sure myself. Unfortunately haven’t had as much time for stocks with work picking up. I’ll be an interested spectator though. We’ve never seen an inclusion this large!

Hey, Moz...
Why do you hold a large position in SPY?
Don't you think you can do better than a broad index?
I don't want about 25% of the crap in the S&P500. (financials, oil & gas, some retail, travel & lodging, etc.