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Author: Tiddman Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 15883  
Subject: Re: unrepentant falling knife Date: 2/13/2008 9:54 AM
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EXPD has always traded at high multiples but has delivered consistent growth over the decades with concentration on the business rather than the economic environment or analysts' opinions. Over the years the company has been mostly a hold for analysts because of the high multiples and relatively higher valuations compared to the likes of Forward air or UTIw.

Well the thing is that these stocks always eventually come back to earth -- the growth has to slow at some point. HOG, SBUX, WWY, FAST, BBBY, etc. forever traded at unattractive multiples until they didn't. How much of your gains were given back by the multiple compression at the end depends on when you bought them.

I guess if you bought them early and got your 25% annual gains for 10 years, the 50% drop at the end doesn't hurt so much. But if you bought them 1 or 2 years before the drop, it's a different story. So how certain are you that something like EXPD is going to have 5-10 more great years before slowing?

The Sequoia Fund tends to hold stocks like this, in fact they hold or have held many of the ones I mentioned, and this seems to be exactly what happens. They hold them for years or decades and get great results, and the company finally flops and they sell after an abrupt decline, but still have pretty good overall results.

Just a different way of doing things I guess. I would prefer to watch 50 of these companies and try to get one of them cheap during a brief problem.
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