Stock Market - The Way Out for a World Economy Hooked On Debt? Yet More Debt |
- The Way Out for a World Economy Hooked On Debt? Yet More Debt
- Comprehensive guide to understanding stock marker concepts?
- Five high quality growth stocks that reported outstanding earnings results during November (The RealReal, Purple Innovation, Grocery Outlet, Farfetch and Nutanix)
- Advanced search of stock market database?
- HFT firms and their impact on the stock market
| The Way Out for a World Economy Hooked On Debt? Yet More Debt Posted: 01 Dec 2019 10:12 AM PST Zombie companies in China. Crippling student bills in America. Sky-high mortgages in Australia. Another default scare in Argentina. A decade of easy money has left the world with a record $250 trillion of government, corporate and household debt. That's almost three times global economic output and equates to about $32,500 for every man, woman and child on earth. Much of that legacy stems from policy makers' deliberate efforts to use borrowing to keep the global economy afloat in the wake of the financial crisis. Rock bottom interest rates in the years since has kept the burden manageable for most, allowing the debt mountain to keep growing. [link] [comments]  |
| Comprehensive guide to understanding stock marker concepts? Posted: 01 Dec 2019 04:09 PM PST Is there something like this? I know investopedia has a ton of definitions, but isn't there like a more structured tutorial that explains things from the basics? I'm referring to things like EPS, P/E ratios, bets, divident yield, etc. I would find it very helpful if anybody knows about that. [link] [comments]  |
| Posted: 01 Dec 2019 12:31 AM PST The RealReal ($REAL, the leading online marketplace for designer clothing, fine jewellery, watches, fine art and home decor) reported strong results on November 4th with sales up 55% but the stock price was hit by a CNBC report on negative customer reviews and counterfeit merchandise. It ended the month down 19% with a market capitalization of $1.5 billion. That valuation (5x sales) looks cheap compared to growth and outlook. RealReal offers a marketplace for luxury items that has resonated with younger customers who see the value opportunity of owning luxury goods for just a short time while also appreciating the ethical aspects of recycling. The company has responded to claims of fake merchandise. It has had to drop its claims that its merchandise is 100% authentic but says it is still the safest place to transact. Its processes are industry leading and, at the end of the day, it offers a guarantee for authenticity so customers should be reassured. However the bottom line for me is that the total addressable market for luxury goods in the US is massive at $198 billion. That means the risk return still looks favourable with RealReal in the early stages of growth. The potential downside is (as always) 100% but that compares to huge potential upside given the current gross merchandise volume of just $1 billion. Purple Innovation, ($PRPL) the bed in a box disrupter of the mattress industry, is growing rapidly through direct online mattress sales yet is valued at just 1.13x sales and 32.0x current year earnings estimates (17.4x next years). Purple is the second biggest "bed in a box" company, after Casper, and was founded by Utah based scientist entrepreneurs Tony and Terry Pearse after they developed and patented Hypo Elastic Polymer (HEP). HEP is reportedly "bouncy, responsive, and soft" and more like a gel than foam (Google "Hypo Elastic Polymer purple" for reviews). This benefit has not been missed by customers. The company reported Q3 results on November 6th and revenues were up 66% and gross margins increased 5.3% to 45.0%. The company had raised guidance significantly in Q2 (with revenue between $400 million and $425 million up from $350 million and $375 million and EBITDA between $24 million and $27 million up from $3 million and $8 million). In the Q3 report the company said it expected revenues to be towards the higher end of that range and that it already expected to exceed the EBITDA forecast. CEO Joe Megibow said "I am confident that we are well positioned to profitably capitalize on the numerous growth opportunities we believe exist for the Company in the near and long-term." The internet combined with the ability to ship a quality mattress anywhere in the country inexpensively has disrupted the whole mattress industry. Purple Innovation has grown quickly and executed well since it was listed in February 2018 but this has not been reflected in the stock price. The company is expected to report profitability for the first time this year. This should be a good catalyst to drive the stock to a higher multiple. Economies of scale and the opportunity to win share in a huge market offer great potential. Grocery Outlet ($GO) reported strong Q3 earnings on November 12th with revenues up 13.1%, comparable store sales up 5.8%, adjusted net income up 58.8% and adjusted EBITDA up 13.2%. Full year guidance was raised across the board with EPS rising from 69 cents to 73.5 cents at the midpoint (and comparable to 18 cents last year). The company has been called the TJ Maxx of grocery and its business model is very similar. It sells branded goods at discounts of 40%-70% by acting as a clearing channel for producers. That offers a treasure hunt experience for buyers and useful way to offload excess inventory for producers. I was initially sceptical of the ability to implement the model for grocery but the results speak for themselves. It is true that the company has to buy and sell certain staples such as bread and milk like any other grocery store. However it appears that there is a huge range of goods (dry goods, cereals, wines, deli, frozen etc) that lend themselves very well to the model. Opportunistic purchases of fresh produce such as meat, fruit and vegetables enhance the product range. The two drivers for this business are;
The stock isn't cheap on 45x current year estimates but, given the company's bright prospects, the valuation appears very justifiable. Farfetch's ($FTCH) stock jumped 29% on November 15th following a Q3 earnings beat with revenues up 90%, GMV up 59%, gross profit up 70% and guidance raised. Farfetch is a high-end online fashion retailer that carries no inventory which is a major advantage when the risk of getting stuck with expensive stock you cannot sell is significant. Instead the company runs an online marketplace where more than 1,000 retailers and 3 million customers from over 50 countries. Growth has been spectacular with revenue increasing by 50%+ for several years in a row. Significantly, Farfetch reported that the site's top 10 brands (including Gucci, Prada and Fendi) had doubled the amount of stock they listed on the site (versus a year ago) and that more than 100 new luxury brands (including Stella McCartney and Brunello Cucinelli) have joined the platform. This rapid growth has led to increasing networking effects and allows Farfetch to charge a 25% to 33% commission fee on sales made through its site. Current year forecast sales are still modest at just under $1 billion. Equally modest, in comparison to the opportunity, is the current market capitalization of $3.0 billion. The $300 billion global market for luxury products is in the midst of a structural shift to online sales. Farfetch, with its network effects, is in prime position to benefit from this shift. There are a couple of reasons why Nutanix ($NTNX) stock is up 20% since reporting mediocre sales growth and an increase in losses on November 25th. The cloud computing software company's move (a couple of years ago) to a software centric rather than hardware centric model has hit the top and the bottom line but the higher margin business looks like it will pay off in the long run. The market has had a mixed reaction to recent earnings reports but its reaction to this weeks announcement has been well received with the stock up 20%. That's despite revenue of $314.8 million increasing only marginally from $313.3 million and GAAP net loss per share of $1.21 more than doubling from $0.54 last year. That's probably due to two reasons.
In short the new business is highly profitable and growing quickly. A good combination. The stock is valued at about 5.1x current year revenues which looks reasonable compared to the growth and profitability of the software business. Additionally analysts expect that software sales will start driving top line growth of 27% next year which should allow similar stock price growth even without multiple expansion. "FOLLOW" me if you would like to see my regular updates during the week. This is not a recommendation to buy or sell. Stocks are risky and not suitable for everybody. Please do your own research. [link] [comments]  |
| Advanced search of stock market database? Posted: 01 Dec 2019 04:34 PM PST Is there any tool out there that will allow me to compile a list of stocks that meet a certain criteria? For example if I want a list of companies that were of a certain market cap size that had dropped an average of some percentage in the last 60 days. [link] [comments]  |
| HFT firms and their impact on the stock market Posted: 01 Dec 2019 08:06 AM PST how has high frequency trading firms and market makers such as citadel improved the overall stock market efficiency in terms of order execution and liquidity? Also, do the ethical concerns such as using predatory trading strategies outweigh the benifits of the efficiency that these firms have created, or is it just a small price to pay for their "service"? [link] [comments]  |
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