The EBITDA margins fluctuate substantially between negative (due to excess supply or demand problems or raw material pricing) to +20/30%. These are commoditised stocks that do not have pricing power. Thus you buy them at the highest PE and sell them at the lowest PE. They must be seen on P/BV or P/Sales while buying and sell them at the peak of the margins.
Buy them at the worst time and wait for the cycle to turn. Sometimes the bad period goes on for 2-4 years so you must be careful with regards to the entry time so the opportunity cost is not too high.
Subscribe To Our Free Newsletter |