Barring Oracle Financial services, all the other top IT companies were trading at valuations significantly higher than their historical averages.
In some cases, they were as high as 2x or even 3x their historical averages.
Now, some of you would say the higher PE multiples are justified because the growth visibility is much higher now than it was before.
Well, I agree. But is the visibility so much better now that the same stock can command twice or even thrice the PE multiple it commanded barely a few months back?
I don't think so.
Besides, with demand for talent outstripping supply, salaries are on the rise across the board. This can squeeze margins and impact growth.
Thus, perhaps PE multiples may not expand further from here. Earnings growth may also slow down.
If you are someone who's investment horizon is 2-3 years and you want to invest in market beating stocks, there is a high chance most large IT stocks may not help you achieve your goals.
In fact, it may not be a bad idea to exit partially or perhaps even fully and look for sectors where the risk-reward ratio is more favorable.
But if you are a long-term investor and have bought these stocks at the right valuations, then you may keep holding on to them in my view.
Your returns from here on may not be as exciting as in the recent past. You may even underperform the market for a bit.
But since you've entered at an attractive price point and since the long term fundamentals of the sector are still intact, your point to point returns will still be impressive.
In some cases, they were as high as 2x or even 3x their historical averages.
Now, some of you would say the higher PE multiples are justified because the growth visibility is much higher now than it was before.
Well, I agree. But is the visibility so much better now that the same stock can command twice or even thrice the PE multiple it commanded barely a few months back?
I don't think so.
Besides, with demand for talent outstripping supply, salaries are on the rise across the board. This can squeeze margins and impact growth.
Thus, perhaps PE multiples may not expand further from here. Earnings growth may also slow down.
If you are someone who's investment horizon is 2-3 years and you want to invest in market beating stocks, there is a high chance most large IT stocks may not help you achieve your goals.
In fact, it may not be a bad idea to exit partially or perhaps even fully and look for sectors where the risk-reward ratio is more favorable.
But if you are a long-term investor and have bought these stocks at the right valuations, then you may keep holding on to them in my view.
Your returns from here on may not be as exciting as in the recent past. You may even underperform the market for a bit.
But since you've entered at an attractive price point and since the long term fundamentals of the sector are still intact, your point to point returns will still be impressive.
👍9
Is it Time to Move out of Indian IT Stocks? - Profit Hunter by Equitymaster
https://www.equitymaster.com/profit-hunter/detail.asp?date=02/14/2022&story=2&title=Is-it-Time-to-Move-out-of-Indian-IT-Stocks
https://www.equitymaster.com/profit-hunter/detail.asp?date=02/14/2022&story=2&title=Is-it-Time-to-Move-out-of-Indian-IT-Stocks
Equitymaster
Is it Time to Move out of Indian IT Stocks? - Profit Hunter by Equitymaster
Has the period of outperformance of IT stocks come to an end?
Hi, pls don't miss today's Microcap Millionaires report where we are booking 80% profits in a power sector stock.
We have also made a brand new reco from the print media space.
By the way, we are back online almost fully.
The premium section has been restored and you can access the report from the website by logging into your subscription account.
Of course, the email delivery continues as usual and the report has been despatched to your email ids registered with us.
We have also made a brand new reco from the print media space.
By the way, we are back online almost fully.
The premium section has been restored and you can access the report from the website by logging into your subscription account.
Of course, the email delivery continues as usual and the report has been despatched to your email ids registered with us.
👍12
Forwarded from Equitymaster
Dear Valued Member,
www.EquityMaster.com is now LIVE.
It’s been a trying 4 weeks since the dastardly ransomware attack.
But we are happy that we are starting to put this behind us. I know you are too.
Thank you once again for all your patience and support even as we dealt with the situation.
As you read this, the extremely dedicated Equitymaster team continues to work flat out to ensure that your overall experience continues to improve in the days and weeks to come.
This is a complete rebuild effort. So, if you encounter any issues, please do write to us at info@equitymaster.com.
Know that each and every feedback and suggestion will be dealt with promptly.
Go ahead visit www.Equitymaster.com now... and access all our honest and credible research. (Before you access the premium section on Equitymaster, you will need to reset your password - https://www.equitymaster.com/Subscription/ResetPassword.aspx?email= .)
Finally a word on the Portfolio Tracker.
We are laying out plans to rebuild the portfolio tracker. With super strong safety features. We also plan to offer tools to make it easy for you to upload your data into the new Portfolio Tracker seamlessly.
A detailed FAQ on the current status of the Portfolio Tracker is available here...
https://www.equitymaster.com/portfolio/faq.asp
Before I sign off, I would once again like to thank you for all your patience and support.
Warm Regards,
Rahul Goel
CEO, Equitymaster Agora Research Private Limited (Research Analyst)
PS: Do send in all your comments and questions...If you prefer to talk to us, just give us a missed call at +91-9136015013 and one of my colleagues will call you right back.
www.EquityMaster.com is now LIVE.
It’s been a trying 4 weeks since the dastardly ransomware attack.
But we are happy that we are starting to put this behind us. I know you are too.
Thank you once again for all your patience and support even as we dealt with the situation.
As you read this, the extremely dedicated Equitymaster team continues to work flat out to ensure that your overall experience continues to improve in the days and weeks to come.
This is a complete rebuild effort. So, if you encounter any issues, please do write to us at info@equitymaster.com.
Know that each and every feedback and suggestion will be dealt with promptly.
Go ahead visit www.Equitymaster.com now... and access all our honest and credible research. (Before you access the premium section on Equitymaster, you will need to reset your password - https://www.equitymaster.com/Subscription/ResetPassword.aspx?email= .)
Finally a word on the Portfolio Tracker.
We are laying out plans to rebuild the portfolio tracker. With super strong safety features. We also plan to offer tools to make it easy for you to upload your data into the new Portfolio Tracker seamlessly.
A detailed FAQ on the current status of the Portfolio Tracker is available here...
https://www.equitymaster.com/portfolio/faq.asp
Before I sign off, I would once again like to thank you for all your patience and support.
Warm Regards,
Rahul Goel
CEO, Equitymaster Agora Research Private Limited (Research Analyst)
PS: Do send in all your comments and questions...If you prefer to talk to us, just give us a missed call at +91-9136015013 and one of my colleagues will call you right back.
👍7
Hi, Tata Power is up almost 5x since September 2020.
The gain is huge considering its pretty average financial performance.
Of course, if history was all there is to the game of investing, the richest investors would be librarians.
The five-fold jump in its share price has to do with its agressive expansion plans. And investors are expecting great things from the company.
But have they overplayed their hands?
Are the valuations of the stock running way ahead of its fundamentals?
Check out in my latest YouTube video.
The gain is huge considering its pretty average financial performance.
Of course, if history was all there is to the game of investing, the richest investors would be librarians.
The five-fold jump in its share price has to do with its agressive expansion plans. And investors are expecting great things from the company.
But have they overplayed their hands?
Are the valuations of the stock running way ahead of its fundamentals?
Check out in my latest YouTube video.
👍8
Hi, Happy to share with you that I was interviewed for a podcast by Paisa Vaisa, India's leading personal finance podcast with 1 million plus downloads and 130 plus hours of content and conversations.
I have covered a host of topics ranging from how a novice investor can approach investing to the secret of my success with Microcap investing and my outlook for the market.
I am sharing the link with you here. Hope you enjoy the podcast.
I have covered a host of topics ranging from how a novice investor can approach investing to the secret of my success with Microcap investing and my outlook for the market.
I am sharing the link with you here. Hope you enjoy the podcast.
👍4
Forwarded from Equitymaster
Portfolio Tracker is LIVE. Please Log In...
Dear Valued Member:
Just a short while ago, we took a major step in our post ransomware recovery process.
Here goes...
We have gone LIVE with the Portfolio Tracker. With all your data intact.
Yes, we have restored the portfolio tracker service for you, dear reader.
This was made possible with support from our partners in the US.
I now invite you to visit the Portfolio Tracker and access all your reports as you normally would.
https://www.EquityMaster.com/portfolio
If you have any questions and comments related to the Portfolio Tracker, as always, just drop us a line at info@equitymaster.com and our team will look into it right away.
Before I sign off, I want to address the point about integrity of our data going forward.
You see, while we had what we believed to be the best-in-class systems to protect our systems and data, we still suffered from the targeted ransomware attack.
Clearly, we need to do a lot more.
You have our commitment that we are doing everything that we can do to make our systems safe and secure.
Finally, I know that the fear of ‘loss’ of your portfolio tracker data caused you a lot of anguish.
On behalf of the entire team at Equitymaster, I apologise for the same.
I hope, as in the past, you will continue to visit Equitymaster for honest and credible opinions on investing...and, for tracking your stocks and mutual fund portfolios.
Warm regards
Rahul Goel
CEO, Equitymaster
Dear Valued Member:
Just a short while ago, we took a major step in our post ransomware recovery process.
Here goes...
We have gone LIVE with the Portfolio Tracker. With all your data intact.
Yes, we have restored the portfolio tracker service for you, dear reader.
This was made possible with support from our partners in the US.
I now invite you to visit the Portfolio Tracker and access all your reports as you normally would.
https://www.EquityMaster.com/portfolio
If you have any questions and comments related to the Portfolio Tracker, as always, just drop us a line at info@equitymaster.com and our team will look into it right away.
Before I sign off, I want to address the point about integrity of our data going forward.
You see, while we had what we believed to be the best-in-class systems to protect our systems and data, we still suffered from the targeted ransomware attack.
Clearly, we need to do a lot more.
You have our commitment that we are doing everything that we can do to make our systems safe and secure.
Finally, I know that the fear of ‘loss’ of your portfolio tracker data caused you a lot of anguish.
On behalf of the entire team at Equitymaster, I apologise for the same.
I hope, as in the past, you will continue to visit Equitymaster for honest and credible opinions on investing...and, for tracking your stocks and mutual fund portfolios.
Warm regards
Rahul Goel
CEO, Equitymaster
👍5👏1
NASDAQ is one of the most trending topics on Twitter today.
The tech index was down 4% yesterday, making April 2022 the worst month for it since October 2008.
Amazon, one of the tech heavyweights was down 14%, wiping out nearly US$ 200 bn in one day flat.
Things are not looking good there with experts expecting a lot more pain to come.
In fact, things could get ugly here in India as well, especially when it comes to 'new generation' tech stocks.
Although I dont want to be a fear monger, being watchful of the underlying business quality and being disciplined about valuations is more important now than anytime in the recent past.
Good quality stocks may go down with the overall market but have the potential to bounce back and emerge stronger.
Can't say the same thing about poor quality stocks that haven't made any profits so far.
So do steer clear of bad quality and exorbitant valuation multiples.
The tech index was down 4% yesterday, making April 2022 the worst month for it since October 2008.
Amazon, one of the tech heavyweights was down 14%, wiping out nearly US$ 200 bn in one day flat.
Things are not looking good there with experts expecting a lot more pain to come.
In fact, things could get ugly here in India as well, especially when it comes to 'new generation' tech stocks.
Although I dont want to be a fear monger, being watchful of the underlying business quality and being disciplined about valuations is more important now than anytime in the recent past.
Good quality stocks may go down with the overall market but have the potential to bounce back and emerge stronger.
Can't say the same thing about poor quality stocks that haven't made any profits so far.
So do steer clear of bad quality and exorbitant valuation multiples.
👍25👏5
Hi Guys, I'm sharing an Invitation to attend my 10X Project scheduled for 10th May at 5 PM. Click on the link for details: http://www.eqtm.in/Jg7a3
Equitymaster
Rahul Shah's :: THE 10X PROJECT
Rahul Shah Reveals 6 Stocks From What Could Be The ONLY Segment That Could Potentially Generate 4x, 6x...and in rare cases even 10X Returns...Without Taking Any Unnecessary Risk!
👍2
Please read the 6 stocks as 5 stocks.... My apologies....
Unless you are living under a rock, you wouldn’t have missed the meteoric rise of Mr Gautam Adani.
But what next? Is the bull run in Adani group of companies over or there is still a lot more to come?
More importantly, if one is sitting on sizeable gains in some of the group companies, should he stay put or exit at least partially, if not fully?
Let us find out in the video.
But what next? Is the bull run in Adani group of companies over or there is still a lot more to come?
More importantly, if one is sitting on sizeable gains in some of the group companies, should he stay put or exit at least partially, if not fully?
Let us find out in the video.
👍2
Forwarded from Equitymaster
How are you dealing with this stock market sell off?
Final Results
52%
Waiting for lower levels before investing more
30%
Already starting to invest more
18%
Thinking of booking profits and exiting the markets partially or fully
The true test of an investing strategy is it's performance across different time periods.
What if I tell you that I tested one such strategy across 10 random time periods and 9 times out of these 10, it ended up outperforming the index by a huge margin.
Thus, even as investors are sweating over which stocks to buy in this dip, I strongly recommend trying out my simple strategy that requires only a handful of rules.
What exactly is this strategy and how good was its performance across different time periods? Check out my latest YouTube video to find out.
What if I tell you that I tested one such strategy across 10 random time periods and 9 times out of these 10, it ended up outperforming the index by a huge margin.
Thus, even as investors are sweating over which stocks to buy in this dip, I strongly recommend trying out my simple strategy that requires only a handful of rules.
What exactly is this strategy and how good was its performance across different time periods? Check out my latest YouTube video to find out.