Of all the stocks quoted these figure quoted were sometime ago, whereas ATM $10.92 low was as recent as Jan. this year.
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Morbid fascination about what might be a good entry point (seeing as I made huge gains in previous years)
Repost of last week. I honestly think its anyone's guess what their future growth rate is, (so TA is your best friend, bet you never thought I'd say that) ;) BUT here is what we know for an absolute fact.
In years gone by ATM was on a forward PE of around 30 and it was growing really really fast and there was little if any doubt that the growth would continue at a very fast rate.
It is currently on a forward PE of a very similar forward metric, growth has really slowed since I sold out at $13 about 3 years ago and there is massive fundamental uncertainty about the future growth rate, the impact of far more widespread proliferation of alternative A2 milk products and a far worse geopolitical and trade protectionism environment as well as questions about how long Covid will be problematic.
This makes no sense whatsoever to me that the shares are currently on a forward PE of 28.7, (much the same as when things looked much more attractive) given how radically the growth outlook, (and other risks) has changed compared to how it looked three years ago..
If I had to take a wild stab at what I though might be some sort of guess at their future maintainable average growth late I'd probably pick a high single digit number like 8 or 9% and that suggests to me based on my own valuation formula where I try and find GARP stocks (growth at a reasonable price) on 1 PE extra above 11 for every percentage point of sustainable growth a fair forward PE for ATM for me to invest is 20 times FY21 estimated earnings. https://www.marketscreener.com/quote...22/financials/
Brokers currently have FY21 average estimate at 38 cents per share. My methodology for finding GARP stocks suggests $7.60 might be an opportune entry point although I personally think the ol downgrades come in three's has a lot of credibility so look out next week !
I don't think anyone's really especially interested in what gains people have made in the past with this stock, (plenty of Tesla zealots do that on overseas threads), what people are really interested in is whether this share is good value now or not ? My 2 cents is I see it continuing to underperform the market going forward, (after the last 3 years of woeful underperformance there could very easily be several more), and the PE coming back to something more like what Danone trades at, late teens - 20.
The growth rate has changed dramatically compared to the rate is was growing at. Some people get that, others think the growth will come back the way it was. Only time will tell who's right and who is wrong. I remain happy to watch this circus from the sidelines for now. Going forward I see better ways of making money with less risk than this, (unless the PE comes down quite a lot to reflect the current circumstances and geopolitical risk).
Hey beagle I wonder what the P/E ratio would be if you net out cash and treat the loss making US as seperate?
They can always stop the US part of the business, which they might do... unless they think it will contribute to future growth? Oooof in that case future growth would be huge!
Also does a company with a high return on equity (and no debt, therefore future growth is ‘cheap’) deserve a higher P/E ratio than another company with a much lower ROE? Hmm something to think about...
Not convinced by the bull or the bear case for this at the moment. I do hold a small amount though (less than their weighting on nzx50) still slightly in green.
Hey guys, no need to question beagles motives for his current deep interest in A2
He knows that when ATM share price goes up HLG often goes down .....and when HLG goes down ATM goes up
Maybe he is just positioning himself for the time that he bails from HLG ....maybe sooner than later ;):t_up::ohmy:
Hi James I think that's been debated a fair bit already. They pulled out of the U.K. because it didn't work so yeah, with the losses in the US another pullout shouldn't shock anyone.
Its clear they need that cash to grow the brand so attempts to back out cash don't cut the mustard with me and I really dislike any attempt at creativity like that although I have used it once on HLG but it's not a really pertinent factor in how I go about assessing a share, other than to note HLG are in an excellent position to pay huge dividends going forward and ATM are in a strong financial position to continue pursuing their growth aspirations.
The model is changing with their own investment in processing capabilities and that might be the thin edge of the wedge and we may see much more of that going forward, (a complete divorce from Synlait in the years to come wouldn't surprise me), so previous high ROE will likely change going forward.
For me it all comes back to growth and with the far more widespread proliferation of other brands and the tendency towards trade protectionism and the Chinese communist party extoling the virtues of buy Chinese made, the future growth trajectory looks far more clouded than it has in years past.
Others will have a different view of the future and that's fine. That's how I see it with my Beagle nose tuned up to long range food sniffing mode :) Easier feeds to be found going forward, elsewhere, simple as that.
No winner...HLG a classic free growth stock, the ones I like the most where you pay a no growth forward PE of 11 for a company with good growth...they're the best type of stocks of all where growth is FREE !! Never let it be said the NZX doesn't offer up the occasional free lunch where we can all be Winners ;)