@phreakv6 All the companies you’ve been tracking in this thread recently are consumption themes and have high PEs like VBL, Manyavar, Devyani etc.
I am actively into markets for a little over a year and find it comfortable to invest in themes/stocks where valuations are low or reasonable (By any metric, be it P/E or EV/EBITDA or P/S) and capturing gains either as the company re-rates or earnings grow. One area I have been quite uncomfortable in and haven’t done well is wrt buying/selling consumption themes which are trading at what I feel are insanely high PEs (For what its worth, the insanity is borne out in my personal DCF calculations and isn’t merely eyeball insanity). To give an example, I was a long time holder of Asian Paints and Pidilite but sold them off in April when I felt crude was going to keep them under pressure for a long time and they were anyway trading at “insane PEs” (high divergence in pre and post covid PEs). But to my utter surprise they bounced and one of them is trading at lifetime high PEs (I’d put this on Twitter a few weeks ago – https://twitter.com/nirvana_laha/status/1562441986237681665)
Given you seem quite comfortable in playing high PE consumption themes, I am hoping to get a few insights from your style. My questions are:
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What is your investment horizon when you enter such stocks and what is it dictated by?
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While its relatively easier to gauge upcoming tailwinds/headwinds in these themes if one keeps an eye out for the economy, how do you evaluate whether entry valuations are decent enough to give you a respectable CAGR over your horizon?
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Or is it that you play these themes strictly with the help of price-volume and other technical indicators and respect them during entry-exit and don’t bother so much about entry and exit valuations?
And one general question if you’re ok answering : What is your investment framework at the moment? If there’s already a thread where you’ve spoken about this, please do point me to it. Thanks!
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