Author Topic: Concentrated US hyper growth stocks - Jan, 2021 - first update  (Read 1034 times)

CloudLiu

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Concentrated US hyper growth stocks - Jan, 2021 - first update
« on: January 10, 2021, 08:54:15 AM »
It's better to start a new thread so it's not buried too deep.

Stock picking is a skill like any other skills that can be learned. It's not for everyone.  It's just as engineering, medical, arts skills are not for every one. In fact, the higher the expected return in investment, the harder to squeeze out more return and there will be fewer people able to do it. It's simple: the higher the mountain, the harder it is to climb.

Getting a high return in stock picking boils down to: high revenue growth rate, strong business model, enough investors following to push up the stock price, never fall in love with the product or company, sell and buy the next best alternative whenever possible when prospect changes(I completely sold out of ZOOM Video before it bottomed from Sep,2020 to Nov, 2020), listen to earning call/read transcript and understand the companies, hold 6 to 10 stocks, not 30 stocks, not 100 stocks, not 1000 stocks, not whole market.   If you own the whole market, you will get average return of 7% to 10%. if you hold the best fastest growing companies, you May able to get 50% to 70% return per year.


My net worth at the end of 2019 was 355k CAD when I quit my job. Now it's at around 570K CAD. Up 60%.  Note: Net worth percentage increase is slightly lowered than growth stock percentage increase because net worth includes low or zero return assets such as: house equity and cash.

Currently, 65% of net worth are in US growth stocks and in just 6 stocks.  The rest of 35% net worth is divided between  house equity and substantial cash in saving account.
 
Here are my 6 stocks and their weight in the growth stocks portfolio:

Symbol   Weight
CRWD   23.43%
PTON   22.66%
SNOW   18.30%
LPRO   16.59%
EXPI           13.93%
LMND   5.09%

BTW: They are up 7% already in 2021, just 5 trading days.
Mean while:
SP500: up 1.97%
WCLD: up 2.15%
VUG: up 1.44%
« Last Edit: January 10, 2021, 09:27:57 AM by CloudLiu »

pnw_guy

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Re: Concentrated hyper growth stocks - Jan, 2021 - first update
« Reply #1 on: January 10, 2021, 09:02:55 AM »
Seems a bit premature to draw any conclusions after 5 (!!!) trading days, no?

Parting thoughts: I'm sure that Jack Bogle, if he were alive today, would tell you:
1. Come back to us in 5 or 10 years and tell us whether you're successful in beating the index as a benchmark
2. If active managers that work at high powered companies with unlimited resources can't beat the index in the long run, why should you be able to do it?
« Last Edit: January 10, 2021, 09:12:02 AM by pnw_guy »

CloudLiu

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Re: Concentrated hyper growth stocks - Jan, 2021 - first update
« Reply #2 on: January 10, 2021, 09:11:30 AM »
it is what it is. They were up 16% in Dec, 2020. I bought them at various point in Dec. If I bought them lump sum at the end of November, the return would be much higher.   

Giving different baskets of stocks, their short term performance is an indication of long term return.
You'll notice WCLD out perform SP500 even in the short term. My goal is to beat WCLD the cloud index.

Note: I am not momentum investor. I picked the stocks based primarily on company business performance fundamentals not price movement in the past alone.


VS:

Dec, 2020:

SP500:+3.26%
WCLD: +9.37%


« Last Edit: January 10, 2021, 09:14:31 AM by CloudLiu »

MustacheAndaHalf

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Re: Concentrated hyper growth stocks - Jan, 2021 - first update
« Reply #3 on: January 10, 2021, 09:13:54 AM »
if you hold the best fastest growing companies, you May able to get 50% to 70% return per year.

My net worth at the end of 2019 was 355k CAD when I quit my job. Now it's at around 570K CAD. Up 60%.
You can't calculate the expected return of a strategy from one year of data.

In 2020, cloud services were needed by people in lockdown.  Why are you projecting the same returns for 2021, when vaccines are being rolled out?  And why doesn't your post mention the pandemic even once?


Here are my 6 stocks and their weight in the growth stocks portfolio:

Symbol   Weight
CRWD   23.43%
PTON   22.66%
SNOW   18.30%
LPRO   16.59%
EXPI           13.93%
LMND   5.09%
When I run experiments, I put the stock in a Google sheet and use the GOOGLEFINANCE function to lookup stock / ETF prices.  And then you can add an appropriate benchmark (S&P 500?) and track your performance against it.

BTW: They are up 7% already in 2021, just 5 trading days.
Mean while:
SP500: up 1.97%
WCLD: up 2.15%
VUG: up 1.44%
You're bragging about one week?  Jan 4 to Jan 8?

CloudLiu

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Re: Concentrated hyper growth stocks - Jan, 2021 - first update
« Reply #4 on: January 10, 2021, 09:20:40 AM »
if you hold the best fastest growing companies, you May able to get 50% to 70% return per year.

My net worth at the end of 2019 was 355k CAD when I quit my job. Now it's at around 570K CAD. Up 60%.
You can't calculate the expected return of a strategy from one year of data.

In 2020, cloud services were needed by people in lockdown.  Why are you projecting the same returns for 2021, when vaccines are being rolled out?  And why doesn't your post mention the pandemic even once?


Here are my 6 stocks and their weight in the growth stocks portfolio:

Symbol   Weight
CRWD   23.43%
PTON   22.66%
SNOW   18.30%
LPRO   16.59%
EXPI           13.93%
LMND   5.09%
When I run experiments, I put the stock in a Google sheet and use the GOOGLEFINANCE function to lookup stock / ETF prices.  And then you can add an appropriate benchmark (S&P 500?) and track your performance against it.

BTW: They are up 7% already in 2021, just 5 trading days.
Mean while:
SP500: up 1.97%
WCLD: up 2.15%
VUG: up 1.44%
You're bragging about one week?  Jan 4 to Jan 8?


My expected return of 50% to 70% return is based on companies revenue growth rate. Not stock price.

I do use Googles spread sheet and functions to track portfolio.

Did you even look into the 6 stocks? 
Out of 6 stocks, only CRWD   is SaaS.

Short term return: see above reply.  Short term perform does indicate future return.

pnw_guy

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Re: Concentrated hyper growth stocks - Jan, 2021 - first update
« Reply #5 on: January 10, 2021, 09:21:47 AM »
it is what it is. They were up 16% in Dec, 2020. I bought them at various point in Dec. If I bought them lump sum at the end of November, the return would be much higher.   

Giving different baskets of stocks, their short term performance is an indication of long term return.
You'll notice WCLD out perform SP500 even in the short term. My goal is to beat WCLD the cloud index.

Note: I am not momentum investor. I picked the stocks based primarily on company business performance fundamentals not price movement in the past alone.


VS:

Dec, 2020:

SP500:+3.26%
WCLD: +9.37%

I don't mean to rain on your parade again because I've already posted in this thread, but you say that you're not a momentum investor and that you buy based on the business fundamentals.

This statement seems quite strange to me based off the fact that you're wanting to discuss great returns achieved over such a short time period. As Benjamin Graham famously said, in the short term the stock market is a voting machine but in the long term it is a weighing machine. Applied to your case, you've told us that over a remarkably short period of time that people are "voting" with their dollar and driving up the price of the few stocks you've selected. However, it's the long term price that weighs the productivity of the companies you've invested in that should reflect the business fundamentals you speak of.

maizefolk

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Re: Concentrated hyper growth stocks - Jan, 2021 - first update
« Reply #6 on: January 10, 2021, 09:32:45 AM »
Happy to follow along and see how this goes.

Stock picking is a skill like any other skills that can be learned. It's not for everyone.  It's just as engineering, medical, arts skills are not for every one.

The key distinction here is that if I figure out a better way to build a bridge as an engineer, it doesn't make the bridges you build as an engineer any less functional. If you find a better way to treat ocular melanomas as a doctor, it doesn't decrease the survival rate of patients I treat for the same condition. In contrast, stock picking really is zero sum in that the only way for you to do better is to beat all the other folks trying to do the same thing.

Anyway, good luck. I hope you post updates regularly.

FrugalToque

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Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #7 on: January 12, 2021, 10:12:52 AM »
Symbol   Weight
CRWD   23.43%
PTON   22.66%
SNOW   18.30%
LPRO   16.59%
EXPI           13.93%
LMND   5.09%

BTW: They are up 7% already in 2021, just 5 trading days.
Mean while:
SP500: up 1.97%
WCLD: up 2.15%
VUG: up 1.44%

You want people here to get excited because you went to a stock market web page and picked six stocks after they had risen in the past week?

I think this might not be the place for that kind of adulation.

Toque.

MustacheAndaHalf

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Re: Concentrated hyper growth stocks - Jan, 2021 - first update
« Reply #8 on: January 12, 2021, 11:22:52 AM »
Here are my 6 stocks and their weight in the growth stocks portfolio:
Symbol   Weight
CRWD   23.43%
PTON   22.66%
SNOW   18.30%
LPRO   16.59%
EXPI           13.93%
LMND   5.09%

In 2020, cloud services were needed by people in lockdown.  Why are you projecting the same returns for 2021, when vaccines are being rolled out?  And why doesn't your post mention the pandemic even once?
Did you even look into the 6 stocks? 
Out of 6 stocks, only CRWD   is SaaS.
You're narrowly focusing on part of my post, while ignoring that your 3 largest holdings all have the problem I described.  Almost 2/3rds of your assets are in 3 companies that benefitted under the 2020 lockdowns.

Your second largest holding is Peloton.  People couldn't go to the gym during lockdowns, but Peloton brought high tech exercise bikes which sold rapidly.  Peloton benefitted heavily from lockdowns.  After vaccination, they will compete with gyms and bicycling outside.  How is 2021 going to be the same as 2020?

Your third largest holding is Snowflake.  Notice how you narrowly focused on "cloud services" and not that "Snowflake Inc. is a cloud-based data-warehousing company" to quote wikipedia.  Both SNOW and CRWD benefit from cloud computing being in high demand during lockdowns.  What happens when vaccinations are complete and activities away from the home compete with data warehouses and cloud services?

Your expectation that 2021 is a repeat of 2020 isn't realistic, and in turn it means 2/3rds of your holdings have unrealistic expectations.  You can research that and come to your own conclusion, or you can ignore obvious differences between 2020 and 2021, and change nothing.

hodedofome

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Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #9 on: January 12, 2021, 02:06:18 PM »
Here are SAAS stocks that I track and their performance over the past 5 years. The outperformance vs the S&P and Nasdaq is consistent. As it should be.

They are the future as well as the present and are taking over the world. All on-premise software will get ripped out over the next decade and replaced with these SAAS products.

https://docs.google.com/spreadsheets/d/1H5-MemM3h_DLC12zUPtbfKPZT9r2pY_XEmHVS90-gAc/edit?usp=sharing

The only thing stopping the SAAS stock train is a bubble and subsequent burst. Bull markets end in euphoria.

CloudLiu

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Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #10 on: January 24, 2021, 09:19:12 AM »
Re: StashingAway : lottery vs stock investing
I donít believe in luck.I donít depend on luck for my future.Iíve never purchased a single lottery ticket,  Lotto or whatever, in my life.  Company organized group buy in lotto regularly and I never bought in. The only exception is the company half and half draw which I participated  a few times. Half of the money went to charity.

I worked hard at my job for more than a decade and lived frugally and saved up initial capital to invest. I did 10 years of dividend investing and it generated 12% per year which looked like a flat line on a return curve vs the growth stocks investing I started in 2020. 


Re: MustacheAndaHalf: Covidís tailwind on some stocks and my expectation of return in 2021 vs 2020

I agree COVID gave a little tailwind to some companies because of the acceleration of digitization. Not all companies are in the same boat as Zoom Video. I sold out of Zoom Video because COVID brought too much future revenue to Zoom in 2020. The future growth rate is a big question. Zoom will slow down for sure but how much?  I donít know.

I observed revenue growth rate is the number one factor determining stock price performance. Now, the number one thing I look at when picking companies is their historical and current revenue revenue growth rate. My 6 picks were growing revenue consistently between 60% to 100%  per year BEFORE COVID pandemic.So what if COVID boosted them a little in 2020. The small tailwind from COVID has no deciding effect on the future growth.

The stocks I own now is completely different to what I owned in 2020.
In 2020, I hold a mixed bag of slow growers and fast growers. Lots of them.
In 2021, I will hold only fast growers. My goal is 6 to 7 stocks.  I expect my 2021 might perform better than 2020.

Simply put, if one picks a group of companies with consistent  above average revenue growth rate and consistent  rising stock price, one will outperform the index. The risk is over paying it.  Example is Snowflake. The valuation is nose bleeding high. If paying too much, stock will go side way or even down in the short term.

Revenue growth rate alone is not a guarantee for investment success.  We also need to look at business model, product, total addressable market and stock performance. Example: Beyond meat, its revenue grew fast for few years but seems it plateaued.  and after initial surge. stock went nowhere for 1 year.  I am vegan myself but I think the reason is Veganism has a small total addressable market.


I just looked at the numbers carefully, My 2020 total return from growth stock was: 71%.
See table below: Notice the annualized return increased as I reduced the number of stocks and increased the revenue growth rate requirement.
 

Change of target revenue growth rate and number of stocks on performance:

Annual Revenue GrowthNumber of stocks From:To:DaysReturn:Annualized
20%17512/31/20197/6/202018813.30%27.43%
30%307/6/202011/30/202014730.00%91.83%
100%611/30/202012/31/20203116.40%497.78%


Total return in 2020: 71%



Re: maizefolk, Stock picking and zero sum game

Stock market is not a zero sum game.   
Zero sum game is where oneís gain is another loss with no exchange of anything else. One example is casinos.  Itís called gambling because itís a game of chance.

In the Stock market, there is a willing buyer and seller of a stock. The stock is price paid. The exchange is partial ownership in a business.
Even day trading is not a zero sum game.  E.g. If someone buys a  house for 100k and sells it the next day for 99k. Whose fault is it?  The seller. Itís stupidity. BTW,I donít do day trading.

Then,  you look at stock pickers vs indexers.
If I picked  6 of the fastest growing companies in the world and get 50% return. 
And indexers bought index funds containing 1000 of stocks and got 10% return.
Who's fault is it?  My gain is not their loss. It's called opportunity cost.

In reality, indexers are hitchhikers riding on the hard work of stock pickers.
The way index funds work is that they are market cap weighted or equal weighted. 

For market cap weighted index, they put more money into higher cap stocks. They donít look at business performance.   They donít pick companies. They let others pick and they change their allocation accordingly. If a large cap company is in a decline, and index funds put the same amount of money to large cap, the pricing is not going to reflect the large cap company decline. e.g. IBM, revenue declining, stock price declined as result.  Is the stock decline the work of index funds? Nope. It's  a work of stock pickers and short sellers.  Index funds are always a few steps behind stock pickers. Index funds will reduce allocation after stock has dropped.

For equal weights, they put the same amount of money in all companies. This has no affect on changing the valuation of companies according different business conditions..

Why do companies get different market caps?  Itís the work of individual or institutional stock pickers.   And the work of short sellers too!  BTW, I donít short sell.
If everyone does indexing, then the market stops working because index funds donít change valuation according to change in business performance.



« Last Edit: January 24, 2021, 09:23:04 AM by CloudLiu »

Proletariat

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Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #11 on: January 24, 2021, 09:45:11 AM »
In 2020, cloud services were needed by people in lockdown.  Why are you projecting the same returns for 2021, when vaccines are being rolled out?  And why doesn't your post mention the pandemic even once?

I'm not advocating that anyone stock pick or go all in on cloud stocks but clearly cloud is not just a pandemic phenomenon. People fail to realize Amazon is not really a retail company. They power like half the internet at this point and their AWS business is their cash cow and is growing rapidly.

Parting thoughts: I'm sure that Jack Bogle, if he were alive today, would tell you:
1. Come back to us in 5 or 10 years and tell us whether you're successful in beating the index as a benchmark
2. If active managers that work at high powered companies with unlimited resources can't beat the index in the long run, why should you be able to do it?

I mean you don't need a ten year timeline if you have a thesis that plays out in the next few years that nets you more gains than you would in a lifetime. Again, I'm not suggesting anyone pick stocks here but there are clearly many examples of people beating the market.  I think in general it's fair to say that allocating a reasonable portion of your portfolio to deep value investing might not be the worst thing you could do with your time and money (not saying that's what OP is doing). There's a guy who turned roughly $50k into so far $11M (he's taken at least $2M in profits) on GME because he had a thesis that turned out to be correct and he stayed convicted over the last year and a half or so. Is that rare and a bit of a moonshot? Sure, but clearly it does happen. He's also not betting his entire net worth either and I'm sure he's diversified into more stable investments.

But yeah I think anything under a year in general is far too soon to be bragging about beating the market by a couple percentage points.

maizefolk

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Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #12 on: January 24, 2021, 09:55:39 AM »
In reality, indexers are hitchhikers riding on the hard work of stock pickers.

You understand statements like this make stock picking sound less appealing and indexing sound more appealing right? A

nyway, looking forward to the first update. Are you targeting Feb 1st?

MustacheAndaHalf

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Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #13 on: January 24, 2021, 10:38:20 AM »
Re: MustacheAndaHalf: Covidís tailwind on some stocks and my expectation of return in 2021 vs 2020

I agree COVID gave a little tailwind to some companies because of the acceleration of digitization. Not all companies are in the same boat as Zoom Video. I sold out of Zoom Video because COVID brought too much future revenue to Zoom in 2020. The future growth rate is a big question. Zoom will slow down for sure but how much?  I donít know.

I observed revenue growth rate is the number one factor determining stock price performance. Now, the number one thing I look at when picking companies is their historical and current revenue revenue growth rate. My 6 picks were growing revenue consistently between 60% to 100%  per year BEFORE COVID pandemic.So what if COVID boosted them a little in 2020. The small tailwind from COVID has no deciding effect on the future growth.

The stocks I own now is completely different to what I owned in 2020.
In 2020, I hold a mixed bag of slow growers and fast growers. Lots of them.
In 2021, I will hold only fast growers. My goal is 6 to 7 stocks.  I expect my 2021 might perform better than 2020.

Simply put, if one picks a group of companies with consistent  above average revenue growth rate and consistent  rising stock price, one will outperform the index. The risk is over paying it.  Example is Snowflake. The valuation is nose bleeding high. If paying too much, stock will go side way or even down in the short term.

Revenue growth rate alone is not a guarantee for investment success.  We also need to look at business model, product, total addressable market and stock performance. Example: Beyond meat, its revenue grew fast for few years but seems it plateaued.  and after initial surge. stock went nowhere for 1 year.  I am vegan myself but I think the reason is Veganism has a small total addressable market.


I just looked at the numbers carefully, My 2020 total return from growth stock was: 71%.
See table below: Notice the annualized return increased as I reduced the number of stocks and increased the revenue growth rate requirement.
 

Change of target revenue growth rate and number of stocks on performance:

Annual Revenue GrowthNumber of stocks From:To:DaysReturn:Annualized
20%17512/31/20197/6/202018813.30%27.43%
30%307/6/202011/30/202014730.00%91.83%
100%611/30/202012/31/20203116.40%497.78%

Total return in 2020: 71%
I strongly disagree that COVID gave a "little tailwind" to some companies.
Your largest holding is Crowdstrike, with 1 year performance of 257%
Second largest holding Peloton gained +421% in the past 12 months.
Snowflake wasn't public a year ago, so it has no 12 month performance.

Covid dominated every stock last year, these stocks included.  Peloton competes with gyms, and in 2020 no gyms were available.  People were trapped inside, unable to exercise outdoors.  To call that "a little tailwind" is false.  Last year was a massive boost to Peloton's fortunes, and their +421% performance shows it. 
"Peloton CEO warns of months of order delays, as overwhelming demand sends sales skyrocketing 172% and rattles supply chain"
https://www.businessinsider.com/peloton-ceo-warns-of-months-order-delays-overwhelming-demand-2020-9

Cloud services power Netflix, which is another example of pandemic demand being much higher.  There's clear evidence the pandemic had a massive effect, as shown in the articles I'm quoting:
"Netflix Subscriber Growth Slows After Surging During Pandemic"
https://www.forbes.com/sites/joewalsh/2020/10/20/netflix-subscriber-growth-slows-after-surging-during-pandemic/?sh=59c7cf1f244e

Where is the global pandemic described as a "little tailwind"?  What's your evidence?

You can quote your personal analysis all day, but you don't seem able to admit the pandemic played a massive role in the stocks you hold.

CloudLiu

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Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #14 on: January 24, 2021, 10:38:49 AM »
I'll try to provide monthly update 1 or 2 days after last business day at the end of each month. People say short term performance doesn't matter. I say it matters. They add up fast because of the effect of compound interest. They'll see.

I'll post updates to this thread. It seems moderators don't like I create too many new threads. I remembered I posted another thread about Canadian growth stocks but it got deleted. I don't know why?   Anyway, there are not many growth opportunities in Canadian market so I'll focus on the US market.





 
« Last Edit: January 24, 2021, 10:59:59 AM by CloudLiu »

CloudLiu

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Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #15 on: January 24, 2021, 10:42:28 AM »
Re: MustacheAndaHalf: Covidís tailwind on some stocks and my expectation of return in 2021 vs 2020

I agree COVID gave a little tailwind to some companies because of the acceleration of digitization. Not all companies are in the same boat as Zoom Video. I sold out of Zoom Video because COVID brought too much future revenue to Zoom in 2020. The future growth rate is a big question. Zoom will slow down for sure but how much?  I donít know.

I observed revenue growth rate is the number one factor determining stock price performance. Now, the number one thing I look at when picking companies is their historical and current revenue revenue growth rate. My 6 picks were growing revenue consistently between 60% to 100%  per year BEFORE COVID pandemic.So what if COVID boosted them a little in 2020. The small tailwind from COVID has no deciding effect on the future growth.

The stocks I own now is completely different to what I owned in 2020.
In 2020, I hold a mixed bag of slow growers and fast growers. Lots of them.
In 2021, I will hold only fast growers. My goal is 6 to 7 stocks.  I expect my 2021 might perform better than 2020.

Simply put, if one picks a group of companies with consistent  above average revenue growth rate and consistent  rising stock price, one will outperform the index. The risk is over paying it.  Example is Snowflake. The valuation is nose bleeding high. If paying too much, stock will go side way or even down in the short term.

Revenue growth rate alone is not a guarantee for investment success.  We also need to look at business model, product, total addressable market and stock performance. Example: Beyond meat, its revenue grew fast for few years but seems it plateaued.  and after initial surge. stock went nowhere for 1 year.  I am vegan myself but I think the reason is Veganism has a small total addressable market.


I just looked at the numbers carefully, My 2020 total return from growth stock was: 71%.
See table below: Notice the annualized return increased as I reduced the number of stocks and increased the revenue growth rate requirement.
 

Change of target revenue growth rate and number of stocks on performance:

Annual Revenue GrowthNumber of stocks From:To:DaysReturn:Annualized
20%17512/31/20197/6/202018813.30%27.43%
30%307/6/202011/30/202014730.00%91.83%
100%611/30/202012/31/20203116.40%497.78%

Total return in 2020: 71%
I strongly disagree that COVID gave a "little tailwind" to some companies.
Your largest holding is Crowdstrike, with 1 year performance of 257%
Second largest holding Peloton gained +421% in the past 12 months.
Snowflake wasn't public a year ago, so it has no 12 month performance.

Covid dominated every stock last year, these stocks included.  Peloton competes with gyms, and in 2020 no gyms were available.  People were trapped inside, unable to exercise outdoors.  To call that "a little tailwind" is false.  Last year was a massive boost to Peloton's fortunes, and their +421% performance shows it. 
"Peloton CEO warns of months of order delays, as overwhelming demand sends sales skyrocketing 172% and rattles supply chain"
https://www.businessinsider.com/peloton-ceo-warns-of-months-order-delays-overwhelming-demand-2020-9

Cloud services power Netflix, which is another example of pandemic demand being much higher.  There's clear evidence the pandemic had a massive effect, as shown in the articles I'm quoting:
"Netflix Subscriber Growth Slows After Surging During Pandemic"
https://www.forbes.com/sites/joewalsh/2020/10/20/netflix-subscriber-growth-slows-after-surging-during-pandemic/?sh=59c7cf1f244e

Where is the global pandemic described as a "little tailwind"?  What's your evidence?

You can quote your personal analysis all day, but you don't seem able to admit the pandemic played a massive role in the stocks you hold.


You are mixing stock price performance vs business performance. I keep my attention to business performance, most importantly the revenue growth rate. Most business revenue did not increase as much as Zoom did.   CRWD's revenue was growing above 100% per year during the past 3 years. That was before COVID. Last TTM, CRWD grew revenue slightly less than 100% sequentially to 75%. It actually slowed down a little bit.

Same with Peloton, Peloton was growing revenue at 100% per year for the last few years before COVID.  Last TTM, revenue grow rate was 80%. It actually slowed down bit.  It's expected. 100% per year growth can't last more than 5 years.  100% compounded for  5 years is 32 times increase. After that, growth will slow gradually. In Zoom's case, it grew too fast so it crashed.
Peloton's recent Precore acquisition will help to expand total addressable market and production.   The fact that PTON can't keep up with delivery means demand far exceeding supply and it means there'll be more room for growth. Currently, IIRC, there's still 1 to 2 months wait for delivery.


Valuation wise, they are richly valued but not over valued.

BTW: My middle name is cloud. It's a reason I used it in my user name.  I am not obsessed with certain product type: e.g. SaaS or Cloud stocks. I am focused on revenue growth rate first.




« Last Edit: January 24, 2021, 10:57:43 AM by CloudLiu »

MustacheAndaHalf

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Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #16 on: January 24, 2021, 10:53:23 AM »
In 2020, cloud services were needed by people in lockdown.  Why are you projecting the same returns for 2021, when vaccines are being rolled out?  And why doesn't your post mention the pandemic even once?

I'm not advocating that anyone stock pick or go all in on cloud stocks but clearly cloud is not just a pandemic phenomenon. People fail to realize Amazon is not really a retail company. They power like half the internet at this point and their AWS business is their cash cow and is growing rapidly.
If you check my posts again, you'll notice I keep saying 2021 won't be a repeat of 2020.  I leave open the possibility that cloud stocks will do better this year than the overall stock market.  What I don't believe is that the record setting cloud usage of 2020 will happen again in 2021.

I don't see data on Amazon for 2020, but in 2019 their retail profits were 5x their cloud services profits.  Compare the situation in 2020: their cloud competitors remained in place, leaving them with 33% (not 50%) of the market according to statistica.com.  But in retail, malls and stores closed, leaving them with almost no competition.  With those conditions, I'd bet against Amazon cloud passing up their retail business in 2020.  I disagree with your claim that they are not a retail company.

Proletariat

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Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #17 on: January 24, 2021, 11:51:10 AM »
In 2020, cloud services were needed by people in lockdown.  Why are you projecting the same returns for 2021, when vaccines are being rolled out?  And why doesn't your post mention the pandemic even once?

I'm not advocating that anyone stock pick or go all in on cloud stocks but clearly cloud is not just a pandemic phenomenon. People fail to realize Amazon is not really a retail company. They power like half the internet at this point and their AWS business is their cash cow and is growing rapidly.
If you check my posts again, you'll notice I keep saying 2021 won't be a repeat of 2020.  I leave open the possibility that cloud stocks will do better this year than the overall stock market.  What I don't believe is that the record setting cloud usage of 2020 will happen again in 2021.

I don't see data on Amazon for 2020, but in 2019 their retail profits were 5x their cloud services profits.  Compare the situation in 2020: their cloud competitors remained in place, leaving them with 33% (not 50%) of the market according to statistica.com.  But in retail, malls and stores closed, leaving them with almost no competition.  With those conditions, I'd bet against Amazon cloud passing up their retail business in 2020.  I disagree with your claim that they are not a retail company.

Fair but I still think 2020 could be a huge catalyst for the foreseeable future and since cloud has already been growing rapidly I think there's definitely a chance some of that spills over into the near-term. Long-term of course I think it's definitely a no-brainer.

Revenue != profit. Retail is Amazon's current largest source of revenue, but not their largest source of operating income - AWS is. I think cloud has much greater potential than retail in the long term, that's why I'm saying Amazon is really not a retail company even though it looks like it right now. The growth potential for cloud is much greater in my opinion. Cloud is high margin and scales well. Retail is low margin and difficult to scale. I am not saying Amazon is going to balloon in price over the next year or even five years, just that huge potential is there. I don't even really care about Amazon in particular, but I'd say 9/10 people have no idea Amazon even owns internet infrastructure as an example.
« Last Edit: January 24, 2021, 12:18:32 PM by Proletariat »