Any undervalued stocks you recommend?

[vgfdshjn]

Also back to the topic:
You mostly find undervalued stocks in areas where very few are digging. Unloved areas such as coal, oil, tobacco, silver/gold miners might have some great candidates which are undervalued.
Also frontier-markets like Uzbekistan can have great results. Keep in mind, stocks are not a Fastlane avenue. It takes lots of work to eek out small performance gains over an index fund.

 

[Guest-5ty5s4]

We will see in 10 years time. Just see the 50 % growth with good margins scenario more likely than low growth. I don't have anything against different Views. Maybe Tesla would be a good short. However this side does not look as good from the probability standpoint.

Luckily studied the company more closely back in the day, I could have been short the TESLA stock based on headlines and seemingly crazy valuation.

Of course, can still be wrong and am willing to change my mind if there's evidence contradicting my Expectations

I just haven't seen you give an actual reason for any of your predictions.

There are no numbers to back up what you're saying. It's like crypto speculation: "Eh, maybe it will double next year." What?

Look at the fundamentals and financials of the company. It is losing money. Investors are just pouring more money into it. How can you accurately predict the future on that?

You know, sometimes things do skyrocket for no reason. Look at Doge coin. Look at beanie babies, pet rocks, fidget spinners. But did anybody use math and sophisticated analysis to predict that stuff? No...because the reasons behind it didn't make sense financially, it was all hype.

TSLA has good products. The company is priced crazy high though. Even Elon has said so.

 

[Antifragile]

@thechosen1

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Guest-5ty5s4]

Or… you can just be ok knowing that things are changing and fundamentals actually don’t make sense any more.

I don’t really believe the stock market follows actual fundamentals or earnings anymore. So you have to decide what type of investor you want to be.

You could have not bought any Amazon or Tesla stock in its early days because they lost money every year. But would you be better off now?

You could have not bought any crypto three years ago because you didn’t understand it, or you didn’t believe in it. But would you be better off now?

Personally I like Tesla and Elon musk. So I bought Tesla. Personally I don’t understand any crypto. But other people smarter than me understand it so I bought some crypto.

The question is what kind of investor are you? Are you sticking to the old rules of the 90s? Or are you changing with the times?

Well, I could have put my life savings into SHIB and be a billionaire right now, but tell me how the crystal ball was supposed to clue me in on that one?

Everyone is a great Monday morning quarter back.

You can of course make up any scenario of random investments and imagine the thousands of percent returns you have.

Is there some other metric you’re using for growth? That would be a lot more interesting than just saying “hey look at the past graph of this company that didn’t meet any fundamental criteria.”

Because for every one that grew 10 fold, there are more that went nowhere.

Yes I do have a portion of investments in stuff like ARKK, TSLA, TWLO, SHOP, etc that just seem to grow without regard for financial measurements. But to me, real investing should have some sort of mathematics behind it. So what’s the math you use to determine growth?

***
it’s really funny you mention the 90’s, because the end of the 90’s was defined by this rampant non-measurable speculation, and led to the tech bubble.

So ironically, the 90’s were the opposite of what you’re claiming I do, and more like the current environment!

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[biophase]

Well, I could have put my life savings into SHIBA and be a billionaire right now, but tell me how the crystal ball was supposed to clue me in on that one?

Everyone is a great Monday morning quarter back.

You can of course make up any scenario of random investments and imagine the thousands of percent returns you have.

Is there some other metric you’re using for growth? That would be a lot more interesting than just saying “hey look at the past graph of this company that didn’t meet any fundamental criteria.”

Because for every one that grew 10 fold, there are more that went nowhere.

Yes I do have a portion of investments in stuff like ARKK, TSLA, TWLO, SHOP, etc that just seem to grow without regard for financial measurements. But to me, real investing should have some sort of mathematics behind it. So what’s the math you use to determine growth?

***
it’s really funny you mention the 90’s, because the end of the 90’s was defined by this rampant non-measurable speculation, and led to the tech bubble.

So ironically, the 90’s were the opposite of what you’re claiming I do, and more like the current environment!

I probably should have said, early nineties. LOL My first ever stock was GAP which I bought in 92. I do remember the dot com bubble.

I just used 2 examples of large tech companies that really had negative earnings early on. Would you have invested on AMZN early on? Or what year would AMZN have been a good buy in your opinion based on fundamentals?

What I'm saying is that "real investing" with mathematics may still work but if that is all you rely on, you may get returns worse than if you had sprinkled in some speculative/gambling stocks in there too. The stock market doesn't move due to mathematics anymore. It moves on tweets, memes, excitement and emotions. It kinds of always did, but back then news was much harder to get. I remember people trying the penny stocks pump and dump on alt.stocks newsgroups.

IMO, A portfolio with only pure fundamental old school stocks is not going to beat the return of a mixture of stocks. So yes, I have some TSLA in my portfolio, I have some AMC also along with Mastercard and P&G. Some stocks I can't tell you why I have them.

 

[Guest-5ty5s4]

I probably should have said, early nineties. LOL My first ever stock was GAP which I bought in 92. I do remember the dot com bubble.

I just used 2 examples of large tech companies that really had negative earnings early on. Would you have invested on AMZN early on? Or what year would AMZN have been a good buy in your opinion based on fundamentals?

What I'm saying is that "real investing" with mathematics may still work but if that is all you rely on, you may get returns worse than if you had sprinkled in some speculative/gambling stocks in there too. The stock market doesn't move due to mathematics anymore. It moves on tweets, memes, excitement and emotions. It kinds of always did, but back then news was much harder to get. I remember people trying the penny stocks pump and dump on alt.stocks newsgroups.

IMO, A portfolio with only pure fundamental old school stocks is not going to beat the return of a mixture of stocks. So yes, I have some TSLA in my portfolio, I have some AMC also along with Mastercard and P&G. Some stocks I can't tell you why I have them.

See, I don’t think you’re characterizing what I do correctly. There’s nothing “old school” about reading financial data.

Would I have bought Amazon when it was a brand new company making losses? No. I’m not going to lie to you to pretend I know everything, that would be stupid.

But guess what? I do own some Amazon because they are a tremendous company with phenomenal margins, return on equity, etc. and they would have qualified based on *actual financial data* decades ago, and you would have made a tremendous return.

This is a case of “ask instead of assume” - because you’re assuming some sort of outdated model whereas really these are just timeless practices.

Some things don’t change: supply and demand, ROI, debt vs. equity, etc. Everybody wants to say “this time is different” and the worst words in investing are “if you had of bought X in year Y you’d have ___”

If you bought GameStop right before Reddit went insane and you made a huge return that’s great. But that was gambling, not investing. Good luck reproducing that.

 

[Guest-5ty5s4]

For reference...

Amazon (still, even in 2021) has outstanding return on equity and it also has insanely low debt levels. The first year that this became true (probably back in the early 2000’s) would have been the absolute best time from a value perspective to invest in Amazon - because of the clear growth opportunities.

A company that does nothing but burn money, however, tells you nothing.

(looks like Amazon was first profitable in 2001 and had an over *5000%* return on equity in 2005. Wow!)

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Antifragile]

Or… you can just be ok knowing that things are changing and fundamentals actually don’t make sense any more.

I don’t really believe the stock market follows actual fundamentals or earnings anymore. So you have to decide what type of investor you want to be.

You could have not bought any Amazon or Tesla stock in its early days because they lost money every year. But would you be better off now?

You could have not bought any crypto three years ago because you didn’t understand it, or you didn’t believe in it. But would you be better off now?

Personally I like Tesla and Elon musk. So I bought Tesla. Personally I don’t understand any crypto. But other people smarter than me understand it so I bought some crypto.

The question is what kind of investor are you? Are you sticking to the old rules of the 90s? Or are you changing with the times?

So “this time is different”? Scariest four words in investing!
Yes you can still participate in Crypto, Amazon and ignore Tesla and make great returns.
Early 90s had a CRE induced recession. Right before Dot Com bubble everyone claimed real assets (like real estate) are dead and tech only!!! This time is different! Yada yada yada.

no thanks.

Edit: to clarify - I own some f-u money in Crypro knowing full well it’s a gamble. I like my odds. I’m not saying don’t invest in Tesla, I’m saying math seems bad. Gamble in whatever you want. Just don’t pretend like there is a logical great reasoning for buying Tesla stock right now.

 

[Guest-5ty5s4]

Also, how do you judge what a good investment is? What's the timeframe? If I buy TSLA today at $1100 and it goes to $2000 in 2023 and then drops to $500 in 2025 and then goes to $3000 in 2030. Was it a good investment for me or you? Doesn't it depend on the person and who sold when?

That’s precisely the problem.

If there’s no way to measure if it’s a good investment, it’s more like gambling. The word is speculation.

Think about how you analyze a real estate deal. I know you’re really good at that and have solid criteria for it.

edit: like @Antifragile said, the thread is about undervalued stocks. You said yourself in this quote that you don't know what TSLA is worth, so...how are you going to say if it is undervalued or overvalued? By definition, you need to determine the value of the company.

 

[Antifragile]

The thread is about listing undervalued stocks. @biophase if you believe all stocks to be overvalued, its fine. Lately, I feel stock market in general to be ”expensive”.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[biophase]

If there’s no way to measure if it’s a good investment, it’s more like gambling. The word is speculation.

Think about how you analyze a real estate deal. I know you’re really good at that and have solid criteria for it.

I have certain criteria that I look for in real estate and to be honest, some are intangible. If I looked purely at the numbers, I wouldn't have purchased many of the homes I have. That's why I'm saying that just going by numbers in the stock market won't work in the future.

So in real estate,

Let's say that you value a home by its long term rental income potential. Let's say that a home that rents and nets $1000/mo is worth $200,000 based on your mathematical model.

Someone else who has 2 kids and loves the neighborhood and its school district is willing to pay $250,000 for the home and the comps in the neighborhood show this home is worth $250,000.

I come along and determines that by using this home as an Airbnb, that home can net $2000/mo. So by my Airbnb calc. model, the home is worth $400,000 because it returns X% to me.

So who is correct here? Well there are 3 different ways each person is evaluating the home's value.

The old "long term" rental calculation may not work anymore. The new way of calculating value may be using its Airbnb potential income. This is a brand new factor in evaluating a home's value that wasn't existing 5 years ago. The guy buying houses based on comps may not be pricing his home correctly either.

All I'm saying is that there are new factors that move the market now and that fundamentals are factored in less now than before.

If you look at what's a good PE ratio, I remember it used to be low like 10-15. Amazon's PE ratio was 250 in 2016. Google was between 25-30 which was considered really high in the 90s. The metrics need to change with the times.

Getting back to real estate, I'm going to factor in alot of other things like proximity to neighbors, distance from hiking trails, effect of global warming, unique architecture, etc... so when it comes to stocks like TSLA, I'm also going to factor in things like, who's the CEO, how is he on social media, do people like him, what do its customers say about the car, etc...

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[ljean]

High PE ratios indicate investors are expecting rapid future growth, the sort of growth that didnt really happen pre-internet. Mathematically, a stodgy old company with a PE ratio of 5 and no growth should return the same as a modern company with a PE of 100 that is growing 20% per year.

 

[smithsta]

GameStop…

Not just a meme stock.

They’ve massively ramped up eCommerce, increased product lines and about to announce an NFT project/marketplace.

Watch this space…

 

[ljean]

Dover Motorsports went up 60% today. I bought it a week ago after analyzing it through a value investing tool.

It was clearly undervalued because the jump today was due to a sale that priced it far higher than the stock price - that price was determined by professionals, not robinhood traders.

Fundamentals do matter, the problem is that there are lots of idiots - I mean amateurs - in the markets today.

DVD was on my radar but it didnt have enough liquidity. My position size would have been around 50% of the typical daily volume.

 

[Guest-5ty5s4]

DVD was on my radar but it didnt have enough liquidity. My position size would have been around 50% of the typical daily volume.

I wish I had that problem. I was kind of chicken about it - it met all of my criteria but I definitely did not open a large enough position.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Antifragile]

The big winners are never large enough.

Isn’t that the truth!

 

[otek]

Stocks don’t compound. The company either grows or doesn’t.

Tesla has more competition than ever right now. The only thing of Tesla I’d buy right now is a car.

Am of course betting on Tesla growing it's Business, and growing it more than the market prices in.
And assuming there's some correlation with business to stock price.

For illustration purposes, suppose market prices in 20 % growth for Tesla for next 10 years, would 6.2 x. If however growth is 40 % per year, would 28.9 x. Am betting, that Tesla will grow its revenues and profits more than market thinks. Will see in 2030 what happened.

Tesla does not have to sell every car. Say, Tesla would have 20 percent Ev market share in 2030. Would still leave 80 percent to competitors. To justify valuation and upside potential Tesla however needs to have good margins. But, to me It seems likely due to Teslas efficient manufacturing and additional software profits.

The Intelligent investor is great. Would also recommend Peter Lynch's investment book One up on a wall street.

 

[ameszaross]

I like the idea of Beyond Meat (BYND) - but do your own research.

Yeah BYND looks pretty good ATM, the fundamentals are not looking great(P/E: N/A, P/B is above 20 which is crazily overvalued, EPS is negative, etc...), but the technical part looks okay. Could grow more than 30% from the current price, but be sure to manage your risk. It is not a safe bet right now, even though the growth potential is great.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Guest-5ty5s4]

@thechosen1 is absolutely right. If you want to get serious, you should study each company and understand whether they have potential to grow or not. You need to look at their statement and be able to understand how strong they are, how many debts they have, and so on..

This requires time and it is a job by its own. It is basically what financial analysts do.

If you are lazy, there is a work around. You could pay a financial and investing company to tell you which stocks to buy. That's a shortcut but you need to trust them and experiment by yourself.

It's is a risky business but still extremely rewarding if you know what you are doing.

Personally I like Thomson Reuters / Refinitiv reports, offered by some brokers. A score of 7+ is a good place to start looking. Then I go to the "fundamentals" tab in my broker's screen and look at the different ratios.

If they are good, I'll consider buying. It doesn't take very long to analyze a company this way, but it can take a long time to identify the companies you want to look at.

All this being said, investing in stocks really isn't that useful until you have a good amount of capital (I mean sure, compound interest is a thing but the whole point of this forum is to not be someone who waits 45 years to enjoy their money). Without that, it's all about work, business, and action.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Kak]

found to contain glyphosate

That is a powerful herbicide BTW.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Raven S]

Exactly... How do you value a company that isn't making any money?

...I guess the same way you decide if Bitcoin is "undervalued" or not, lol

What was the formula again.. lets see.. one part greed, mixed with 2/3 ignorance, sprinkled with some congnitive dissonanse for that pure to the moon experience?

 

[Raven S]

That is a powerful herbicide BTW.

Anyone up for playing " lets pretend our gut biome isn't important" ?

 

[Kak]

Anyone up for playing " lets pretend our gut biome isn't important" ?

I'm not. I was just stating fact.

I have a big jug of the stuff in the garage. I use it to kill weeds in my landscaping. I would not want to ingest the stuff.

 

[BizyDad]

What was the formula again.. lets see.. one part greed, mixed with 2/3 ignorance, sprinkled with some congnitive dissonanse for that pure to the moon experience?

"It's down!! Buy more and HODL"

"It's up!! Buy more and HODL"

Really scientific.

This sounds like my exact reasoning for buying into Shiba Inu. I have some extra cash, why not? I know nothing about crypto, why not? The price dropped, buy more, why not?

I mean if the price just goes to a penny...

That's undervalue.

TO THE MOOOOON!!!

But for real though, I like stocks that are pioneering/capitalizing on the coming AI push. This week I went with chipmakers in that space.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Raven S]

I'm not. I was just stating fact.

I have a big jug of the stuff in the garage. I use it to kill weeds in my landscaping. I would not want to ingest the stuff.

Yeah, I intrepreted it as such Kak. So my reply was meant to be ironic =) I loved your short to the point remark. - nuff said really. Its pesticide.

Totally non-random trivia for the day: Making Kombucha is actually darn easy, once you get the hang of it.

 

[otek]

What exactly gives you the confidence in Tesla? The low P/E ratio?

Amazon had crazy pe ratios whole time, like Tesla now. It's the growth rate of the business. For example 1.5^10 is 57x.
Tesla has managed that for now. In the future we will see. Of course the TAM caps it. Car, energy and transportation in General, is luckily huge market.

 

[otek]

Amazon had crazy pe ratios whole time, like Tesla now. It's the growth rate of the business. For example 1.5^10 is 57x.
Tesla has managed that for now. In the future we will see. Of course the TAM caps it. Car, energy and transportation in General, is luckily huge market.

And of course the profitability is required at some point. With Tesla the operating leverage has kicked in already, the operating margin is almost 15 percent

 

[Antifragile]

That’s a lot of hopeum @otek

It may be a mistake to compare Tesla to Amazon in spite of both CEOs being space boys.

Let me be more specific. Amazon disrupted Retail industry by lowering Transaction Costs (TCs). I’ll define TCs as
1. Triangulation: the cost of the parties finding one another and agreeing on price and other terms.
2. Transfer: The cost of transferring the goods and the payment; and
3. Trust: the cost of ensuring each party will honour the terms of the deal.

Back in the late 1800s and early 1900s - Department Store as a concept did the same.

Then he did it again with various server offerings for digital storage etc. He did not have a high PE ratio, he had losses! He did it on purpose and wrote to his investors why (read Jeff Bezos letters for more info).

Please educate me on what you expect Elon to do to get the 5x? And from todays 300 PE ratio - how is he supposed to lower it to something that could get an investor excited?

There is hype around Tesla and being “green”. And the guy has rockets in space - amazing stuff, I get it.

But can we focus for a second on what it means to have a 300x PE ratio? I mean… shit 300!!!

I feel that investing in Tesla today is like being welcomed to Sparta:

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[otek]

That’s a lot of hopeum @otek

Please educate me on what you expect Elon to do to get the 5x? And from todays 300 PE ratio - how is he supposed to lower it to something that could get an investor excited?

View attachment 40466

The 300 pe (last 12 months) is already misleading as Tesla has grown its net income during recent quarter. Assuming Tesla does not grow anymore and holds the 1.6 billion net income level By quarter, times 4. 900/(4*1,62) = 138,89 PE

Taking into account that Tesla is buildig two new factories and has also new Products in pipeline, seems likely that the revenue will grow. And the net income will likely grow even more due to operating leverage.

For exemple if Tesla after about two years has ramped up fremont to 500k, shanghai 600k, berlin 550k, Austin 550k, would more than double the revenue. Assuming 48k asp. 48k * 2200k, 105 600 billion in revenues. Current Gross margin is 30 %. Due to operating leverage, RD and SGA would likely not grow as fast as revenue. Operating margin could be say about 19% (from 14.x percent)

If you look up Tesla's balance aiheet, Tesla has almost already paid down its debt. Interest payments would not be as much. Net income would be after taxes maybe around 15 %

With automotive, pe would be with current market cap, 900/(105.6*0,15) = 56.8 PE. In about 2 years.

And I don't think its likely that Tesla stops expansion in 2023. My time horizon with Tesla is 10 - 20 years.

Of course those are rough Estimates and can go wrong. But illustrates the concept that crazy high PE can go down quite fast.

However with Tesla I believe the market will give, maybe around 100 PE in 2023, so it will always look crazy expensive.

 

[Antifragile]

Wait a minute, so you are hoping that one day Tesla has a 30x PE ratio? And you fully expect it to stay above 100x and still it’s a good investment?

Oh my… no wonder I cannot understand the latest stock market pricing. People have gone mad.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.