No. of Recommendations: 25
Let's take a closer look at the common traits of the particular companies most of us are invested in. First and foremost, they are at the forefront of the information/data "revolution." There have been a few true economic paradigm shifts over time. The "agrarian age", the "age of colonization", the "industrial revolution" and now the "information age" (did I miss one?). Those who recognized what was going on and postured themselves to benefit were inevitably richly rewarded in comparison to those who did not....

...all these companies are experiencing incredible revenue growth with spectacular margins and carry little or no debt.

All these companies offer imperative, well protected products that do exactly what companies demand from their IT organizations:... Keep the ship afloat, reduce cost, reduce risk. Management of massive quantities of data is now an essential ingredient...

All of these companies are "disruptors"... in every case the old guard has been caught off guard and now is faced with the standard dilemma of how to move forward while maintaining their cash cow. Even with the history of companies that once ruled which have since gone out of business... or have been relegated to the role of just one of the pack commodity provider status it is astonishing that this is a dilemma for executive management. The handwriting is on the wall in big, bold, red letters. Yet, that this is a dilemma is a reality.

Will the growth rates be sustained forever? Of course not. But in most cases the companies we're invested in... have barely scratched the surface of their TAM - and in all cases, the TAM is also growing. And for the most part, these particular companies are the creme de la creme of the crop. Don't take my word for it. Look at Gartner, Forrester, etc.

Forever is a very long time. But years is not an unreasonable time frame in which to expect continued growth at a torrid pace assuming management doesn't screw it up (big assumption, I admit).

These are not the characteristics of "momentum" stocks. These are fundamentals.




That's just an awesome write-up Brittlerock, thanks so much. These companies are really in the forefront of a vast revolution, and just about every enterprise in every field needs what they are selling. Yet we have people worrying that they have P/S rations higher than an "average" company would ever attain. It just blows my mind.

Having the stock prices drop irrationally doesn't change what they do, or what their prospects are, in the slightest. We should all keep that fact in mind! The obvious conclusion is that you can now buy these companies with enormous prospects at cheaper prices (if you have free cash, which I don't).

Saul
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