SodaStream currently has a PEG under 1 and it is growing fast. So if there were time to take a shot, it is now.
ProfR,
I have an answer: You buy these companies when they first hit Investor's Business Daily (IBD), which has an incredible knack for finding them. APPL, WFMI, CROX all made their way into IBD in the early stages of the takeoff.
Then, you use valuation discipline to buy them when their valuations are in line with reasonable growth metrics, as we have discussed.
Chipotle Mexican Grill (CMG) -- another IBD special, is another stock of the decade... and another Peter Lynch-like pick.
Um CROX? Boy do I ever have a story.
In college, I worked for the first investor in Crox. He met these guys with this strange idea to makely oddly colored ugly rubber shoes and he invested $300,000. At the IPO, he took out more than $30 Million.
True story. I like the product, and unfortunately, I did not get even $3,000 into that first round of financing.
Re: Only one item to look at
ProfR
2/21/2012 10:06:05 AM
The problem with this is that even if they have a good product, it is tough to know how the company will execute around this. That is the problem with just looking at the product and not knowing about the company. Apple did a good job with the IPod but in the past stumbled with the early MACs. When Jobs left, Apple did not do very well even though they had good products and a strong following. So when do you buy?
I could kick myself over Apple. I had one of the first machines in like 1980 and even then you could see this emerging cult following around the products. It's only intensified.
I have a Soda Stream machine because my husband is diabetic and loves carbonated water. It is so simple and easy to use and there is no bottles to vary home from the store. We only use it for plain water. I can't speak to the flavor packets.
However I did meet the sister of the owner a year or so ago. I believe the company - at least then - was Israeli based.
The Apple thing is ridiculous. I mean it seems so obvious, right? I know tons of Apple fanatics. I it was everywhere. Yet so few people that I know actually bought the stock!
Apple has returned 500% in just the past four years!
I think this approach works extremely well if you have valuation discipline, you don't get too "religious," and you can watch the stock closely and add to the position at opportune times.
For example, I made a fair amount of money in Whole Foods when it first started sprouting up and wasn't yet mainstream. Unfortunately I sold most of it (same old story).
I have a relative that seems particularly good at this. She identified Starbucks as a hot trend in 1990. This is the same person that pointed out Whole Foods to me in 1998. Most recently, this person sent us a SodaStream machine (SODA). Hmmm. It works well, and the kids love it. The flavor packets seem to have a lot of profit margin built it. I am checking it out.
Re: Only one item to look at
cat tail
2/21/2012 9:17:43 AM
A friend of mine did quite nicely on Apple because she had the sense to buy when iPods started showing up everywhere. She played a hunch, and it payed off. I can look at p/e til my eyes blur, but you have to have a list of companies to start researching. And why not create that list from your own knowledge rather than just look into a company you hear someone else talk about?
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