Apr 30 • General discussion
Evolution - Deep Dive coming
An excellent way to find interesting stocks to analyze is to look at good companies that have fallen sharply. They might of course actually be value traps, but it's a nice place to start if a lot of other people used to think it was worth 5x as much and it's still the same company.
EVOLUTION might be such a fallen angel.
WHAT WERE THEY DRINKING?
The risk in Evolution is in a way 20% lower now after the 20% price fall on weak earnings today.
An investor today still faces the same coming future stream of cash flows as an investor yesterday. The difference only being that the investor today has more clarity regarding this past quarter, and possibly a slightly better guess for the following few. After that the water turns just as dark as before
It certainly looks like a good time to be accumulating shares starting here at 675 SEK -- quite the opposite from during the buying frenzy around 1700 SEK four years ago. WHAT were the thinking?!
I thought it was overpriced back then due to political risk and high valuation multiples. Now, however, at the current P/S and P/E, it’s a totally different story -- a 2,5x different story, and 4 years closer the future stream of cash flows, i.e., another factor of 1.75 less discounting to do (15% per year for four years)!
Evolution thus has 4.4x more upside now than it did then. It’s still not a certain money maker of course, but way, way, wayyyyy better today at 675 SEK than at 1709 SEK in spring 2021. Please note, however, that we’re still likely facing a year of global economic slowdown, and Evolution probably has to get through a few tough quarters, so don’t spend all your money at once. But do start analyzing, setting price alarms and start nibbling, for example a tenth of your desired number of shares per month.
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Evolution - Deep Dive coming
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In this community, I share my real-time investment process, shaped by years of managing a billion-dollar hedge fund.
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