HHG were stuffed by picking A2 - down 47%
Hope FPH isn't their A2 of 2022 - you know the high flyer with slowing growth that sees its share price tumbling down from outrageously high valuations
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5m covid cases last week.
2022 will be a tough year with rates increases and inflation.
FPH is one of my picks for 2022 and I am very happy to have money in this proven blue chip stock.
Hi winner(or anyone else), would you be able to post the broker picks for CY22 if you have those to hand. Perhaps in th stockpicking competition thread. Many thanks.
2021 Results
Attachment 13356
2022 Picks
Attachment 13357
I see Shareclarity has a DCF value for FPH of $23.06
Thought i'd update my DCF for FPH which I did a few years ago.
It came out at $34.23
First run run through came out $24.68 so I boosted sales growth assumptions, kept margin improvement going longer, upped the long term growth rate for terminal value calcs and turning a blind eye to the significant capex they talk about ....and lowered the discount rate ....after all that it came out at the $34.23. Cool eh
After all that I can't bring myself to increase my exposure to FPH. Suppose I'll be the loser out of that decision.
Then went back to the sign off I use ...... basically says justify to yourself high valuations you are sort of justifying to yourself that future returns will be on the low side....or maybe negative
Thanks for posting your DCF and comments Winner. I'm a long term Belieber (is that phrase still a thing!) in FPH. I read alot of Alokhdir posts and nod in consensus and enjoy your views/responses.
I am wondering (with some interest) if there is some form of 'Wedge' forming on the chart, with a breakout (up or down?) imminent (I am no chartist at all, so high speculation!) The down trend (from $37) and then the up-trend (from $27) seem to be converging around $32/33....
In english, maybe Mr Market is considering that the effects of COVID and related variants are here to stay, hence re-rating FPHs foothold and ongoing increase of their consumables.
I guess this is the problem with all forward looking valuations (like DCF) ... they are based on assumptions which may or may not be right. To be honest - normally they are wrong.
If I look back at my work (where part of my job was to plan rather complex projects - involving decades of person years ;) ) ... while I completed many projects as judged by customers and company as successful, none I can remember ended in terms of requirements, timeframe and resource allocation aligned with the initial plan. How could they? Every time we started to develop something, both customers and we learned more about the requirements ... and so they changed. And this is just looking at individual projects.
FPH is running multiple complex projects ... and on top of that highly complex factories. Neither demand nor supply is predictable (just look what Covid did, and nobody knows the next move of the competition). Nobody has an answer to questions like:
How is Covid going to develop and what impact will this have on FPH's sales?
When is the next pandemic starting and which impact will this have on FPH's sales?
Does any of FPH's competitors have better or comparable equipment they are going to release next year?
What political pressure will impact on FPH's sales next year or in the years after (e.g. a Trump Mach 2 might again play with import tariffs or close the borders to products from where ever).
Which means the best one can do is to look into history and assume things might go as they did so far, or they might go either better or worse. DCF values might be interesting if they show you what the market currently thinks, or they may be useful to measure how hard a company has to work to deserve the current market valuation ... but they are clearly not a reliable measure how much a company is worth. Nobody knows.
Having said that .... FPH looked every time expensive I looked at them over the last two decades or so ... even when we could buy them for something like $1.20 in April 2000. My goodness - this is a CAGR of 16% for the last two decades ... and they paid on top of that some dividends, didn't they?
Seems to be one of these shares where the benefit of hindsight makes the difference for the purchase decision.
Discl: Holding some, but in with the benefit of hindsight not enough ... and I am pretty sure I will say the same thing next year and the year after that :p;