No. of Recommendations: 10
I am starting a new thread to examine the topic of this post: https://boards.fool.com/34119520.aspx

We should actually maintain a running list of stocks in the dumps but how otherwise have great businesses. We should examine them for the common denominator that differs those that recover tremendously vs. those that do not:

These are but examples to the Splunkian point. That point is, is that we follow a universe of superb and disruptive businesses. Almost all of them are "outrageously overvalued" in the way of the Rule Breaker. A few got textbook cheap (Pure, Nvidia, Nutanix), others just seemed too cheap when compared to their peers (Talend), and still others are hard to grasp (Pivotal).

But those stocks that are dominating their markets (or disrupting the heck out of them) with accelerating business opportunities ahead, with large CAP, are ones to watch all the time for the Splunkian, on Nvidia or Alteryxian or the grand daddy of them all: Twilioxian type of stock crashes.

Note the common denominator, the ones that returned were dominant, and had accelerating business fundamentals. Pure and Pivotal and Talend do not demonstrate this. They also have not recovered. Nutanix clearly demonstrated this in spades, and Nvidia does as well (it just has not happened yet, but it is the perception that matters, and we know the perceived future and Nvidia's place in it all).

So follow the stocks, note if this common denominator is met, and then buy them in the pits, when such opportunities present themselves.

Further, keep buying at all times those stocks like Mongo, and many would say Trade Desk, at any time until such time as their market caps catch up with their accelerating business opportunities and CAP to achieve them.

Stay away from excellent businesses who business opportunities are no longer accelerating. Pure, Talend, Arista...at least until the perception of acceleration is reignited.


I have addressed PURE before on this topic because PURE has an excellent business, high growth, etc. The problem is, is that PURE is not demonstrating that it is disrupting the market anymore or that it is taking anymore marketshare. Thus its once would disruptor to reshape the storage market (like EMC and NTAP did before them) is no longer a disruptor reshaping the storage market. It appears that competitors have adjusted well enough to cover over the pain points that would lead to them being disrupted. Thus PURE does not have accelerating business fundamentals.

But we should keep a list and identify those that do. Docusign we have discussed as much as any stock that we have ever discussed. Docusign clearly belongs on this list to determine if now is that cellar type time that is opportune to buy, just as the chart I linked to in the linked post showed how making money in Splunk all depended on when you bought.

So anyone have any such they want to discuss? This is something valuable to do on an on-going basis as this phenomenon will happen into perpetuity and it is a good practice to stay on top of these potential opportunities as they happen.

Tinker
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