Back Down Again

I was going to post an article Sunday night about how, it seemed to me, that stocks entered the overbought territory. Fatigue got the better of me, but two days later, the market is on a decline.

To what extent is the selloff related to extended (short-term) valuations? That's hard to say. On Monday the Fed Whisperer (Nick Timiraus of the WSJ) Tweeted (naturally) that, essentially, the Fed isn't in as benevolent mood as it may seem -- i.e., the Fed will still send the economy into a recession if it deems fit.

It's worth noting that the Fed's record of predicting its own behavior is less than pristine.

Looking at the SPY charts for 2019-2021, we see that prices dropped in early December and rebounded in mid-December. That being the case, it seems to me that we may still have a "Holiday Rally."

I haven't posted much lately because I don't see any good buys I want -- not for the Model Portfolio.

However, ABNB is moving into good value territory. ABNB trades at $91.20 post-market. That's -52.5% from the 52wk high and 7.52 Price to Sales FWD. That's not cheap, but it's far cheaper than ABNB historically. 

That's also cheap compared to other high-quality growth stocks: NOW trades at 10.91 PS FWD, PAYC 13.31, and 10.71 for ASML. ABNB trades at 18.81 Price to Cash Flow FWD. Again, not cheap, but cheap for ABNB historically (also lower on a PCF FWD basis than NOW, PAYC, and ASML).

Here's a look at those companies' projected CAGR using 5yr revenue exit (per FINBOX):

    NOW    21.5%

    PAYC    22.1%

    ASML    15.3%

    ABNB    19.7%

Considering ABNB's CAGR (which may be conservative if ABNB continues executing well) and valuation, ABNB looks attractive IMO. If it continues to dip, I may add it to the Model Portfolio. The main reason I'm not adding it now is I have my eye on several stocks and I'm not quite at a decision point.

That's all for now, everyone have a great rest of the day!

This website is created and authored by Marlin Sandlin and is published and provided for informational and entertainment purposes only and merely cites my own personal opinions.  I am not a financial advisor, and this website is not intended to constitute investment advice or provide specific advice or recommendations for any individual or on any specific security or investment product.  Any action you take upon the information you find on this website is strictly at your own risk.  This website may share links to articles and information which is interesting to me, but it is in no way an endorsement by me or by anyone associated with me.  The views reflected in the commentary are subject to change at any time without notice.   I may or may not hold investments in the companies or securities discussed on this website.

Marlin Sandlin owns shares of Airbnb, Inc. (ABNB), Paycom Software, Inc. (PAYC), ServiceNow (NOW), and ASML Holding N.V. (ASML)

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