Afam Edozie

Afam Edozie
Contributor since: 2013
Company: Grow Africa
I started looking at this stock because it only corrected 22% during the January sell off.
But it seems to be broken as a growth opportunity. Revenue growth for the last 4 quarters has been going down (131%, 130%, 37%, 16%) and EPS growth appears to be deceptive, 216% seems impressive until one considers that the comparable quarter same period year ago was quite low.
I think I'll hold onto my money or buy more facebook
For a Chinese stock NTES has done very well over January, down only 18%. Great growth, great valuation. I shall be catching my falling knife now.
Thanks for the analysis. I think you are spot on
Acquisition fueled growth
Limited visibility (and likely) low organic growth
Low margins
Number 3 position (if you are not 1 or 2 you might as well be last)
High leverage
And no margin of safety in the valuation.
Past 3 quarters revenue 53% (Mar), 26% (jun), 9% (Sep)
Past 3 quarters EPS 300% (Mar), 30% (jun), -12% (Sep)
Regardless of what I might think I know about its position in the industry and about the growth in the industry. I would strongly advise against owning any stock with its key indices looking like this.
The bounce from 21 to 33 is no doubt encouraging, but the odds are against any further price appreciation with metrics tracking in the wrong direction.
This whole things sounds religious.
HLF whether or not Herbalife's business model is legal will be determined by the FTC.
Attaching odds to the outcome as to whether or not on finding issues with its business model the FTC will call for it to be wound down, or whether it will institute fines and guidelines with a time period to comply is beyond the scope of the average investment analysis (this one included).
Those with a legal and regulatory edge will possibly be able to better to provide odds, the rest are undertaking poor quality speculation. With the exception of the stock manipulators who of course as always, made a killing.
Thanks for the article, very useful. How would you explain the declining revenue growth
Q4 2014:210%, Q1 2015:211%, Q2 2015:17% over the past 3 quarters.
Good presentation, thanks.
Private jet is a reason to pay close attention to management and listen to the various employee sites, but not a reason not to buy.
A great company will do well, even if the management is not perfect.
What to watch is growth of their sector, penetration into the addressable market, there market position and any competitive advantage. If you are the leader in a growing market with low penetration, a jet here or there won't harm the business. What does the harm is when you lose leadership. Ask the investors in Research in Motion, Motorola or Nokia.
I would agree.
The most important commodity in a free market system is money.
The price (interest rate) of which is tightly controlled by a private sector organisation which has been awarded a monopoly by the Federal Government which also happens to be the biggest customer (borrower) and with which it closely colludes.
Lets focus on benefits, rather than features. 64-bit, blah, so what?
Looks like the MMs took out the stops this afternoon.
It sounds like he knows enough about marketing to do more of what works.
I will always believe that those who are most successful selling financial services understand marketing better than investing. This is why all over the world most money managers fail to beat their indexes over a 10 year period, but continue to get paid.
The future is not only unknown, but unknowable. Only the odds can sometimes be known.
Giant companies go bust all the time PanAm, Enron, AT&T, GM to name just a few.
The stock market is a forward looking discounting machine, not a backward looking one. Dividends yields and PEs are based on what has happened in the past, not what will happen in the future. The key to calculating the odds is always an understanding of the drivers.

Oil prices are extremely volatile, always have been and probably always will be. This is because it is a commodity where out of the thousands of buyers and thousands of sellers none have a sufficiently strong market power to stabilise prices (OPEC as a producers union has had mixed and normally short term success in doing this) and storage capacity is a small fraction of monthly demand.
As far as energy is concerned the combination of coal, natural gas and uranium account for the lion share of electricity production and increasingly there share of transportation fuel will increase as the number of electric vehicles increases. As a percentage of global energy supply, oil is on the decline.
No doubt the high cost of much of the oil production that came on stream over the past 5 to 10 years, will create a floor for the market. However, note that even when prices dip below $60 it will take over 3 months to see meaningful amounts of this production shut in. So one would better view this as a long term floor (i.e. where prices are unlikely to REMAIN below for a sustained period, not where prices will not go - ask investors in natural gas).
However, what is important here is that MARGIN COMPRESSION is most likely to hit the industry. Certainly over the next quarter, likely over the next 4 quarters and possibly for longer than that.
No doubt for Exxon and Chevron, compression in upstream margins will be compensated for by improvements in margins in their downstream refining, distribution and chemicals businesses. And I haven't looked closely enough at their businesses to evaluate the ratio's.
But if I were looking at buying a bottom this is where I would focus. I would also wait for oil prices to stabilise rather than trying to predict where they will stabilise (or at least if I was trying to predict I would keep my bet size small because it truly is a high risk high reward gamble).
Nice . . . but
'doesn't matter, they're dead'
Share prices tend to be lagging indicators
For most of my life I didn't believe I was gambling and certainly didn't play casino games.
However, late in life, it was brought to my attention that most of the more successful business people and investors (read Warren Buffet, Bill Gates, Getty, Carnegie, etc.) are strong card players. And that success in investing (and business) is as much about understanding how to manage risk as it is about trying to pick the best stocks/investments.
You described in your article your 'system' of stock investing, which if you implement it fairly rigorously then it gives you a positive edge (I haven't tested it and I'm taking your word for it and it does make sense to me as well).
How much you make off your system will now depend on how much you 'bet' on each company. Of course how much you 'should' bet is determined by a specific mathematical relationship Kelly's Criterion, which is borrowed directly from casino gambling (risk of ruin).
It may surprise you that investing is more similar to gambling than many investor realise and that learning the principles of successful gambling makes you an immensely better investor. I have no doubt that Warren Buffet would not be as successful as he has been if he were not such a good poker and bridge player.
A metaphor about catching falling daggers comes to mind.
Yes, this is what I said, the outcome on any individual stock investment cannot be known in advance or to a high level of certainty.
The outcome of an investment into 20 stocks that are selected based on the same characteristics can be known to a high probability.
This is why it is very difficult for investors to succeed if they do not take a systematic approach. It is like the casino operator, who has a 5% edge in the game of roulette. You cannot tell the outcome of any spin, but if you make enough bets you can know (as a Casino operator) that you will capture 5% of the amount bet on the table.
Your stockbroker will happily spin for you between 9.30am and 4pm, for a small commission, you must have a positive expectancy system if you want casino like profits and no system if you want to be the punter.
Buying stocks is more science than art. You can never know the outcome of any single individual stock investment, but by following a systematic approach you can tell within 95% probability what the result will be over the long term, from buying a basket of stocks that have the same quality, growth and valuation characteristics.
Its all noise. CRTO is a volatile stock and will likely trade between 28 and 40 depending on rumours and market sentiment, until there is new information that will take it over 50 or lack or back down to 25. My bet is that it will go up to 60
With any high growth company such as Criteo, you should focus more on forward earnings (and of course whether or not it can beat it). Its forward PE is 41 and it grew its revenues by 60% in the June quarter and its earnings of 4 cents compare to negative 12 cents in the same period year ago.
The companies guidance issued 5 August is for similar growth in the September quarter.
As far as growth companies are compared Criteo is undervalued by up to 50% (a PEG of 1.0 would be fair).
On the negative side, the company is investing heavily in expanding its sales and marketing capability, if this does not result in even more growth, then it will begin to struggle to meet earnings growth by Q3 2015.
I see Criteo as a good bet (good quality, good growth, good price)
Last week's bribery catalysed sell off and today's pull-back seem to be a good entry opportunity, for a company that has potential to double production over the next five years.
Seeking Alpha is a blogging site. Your going in assumption should be that every article is biased. There is not even an attempt at editorial control, many of the bloggers are anonymous. (I would go further to say that all information you receive whether published, printed or verbal is purely beliefs and opinions and is probably biased either consciously or subconsciously).
Toro declared their interest on the site when they posted their articles, they did their due diligence to the best of their ability and they put their money and the money of their clients behind their analysis.
We don't determine outcomes either in investing or in life. We can only follow good process and do our best. All investors will be wrong from time to time, the only defence I have is my stop loss.
The stop loss is even a defence against being right (after all the stock market can remain irrational longer than I can remain solvent).
Even though I believe the Toro story, I was stopped out of NQ months ago (with my limited loss). That said, today (3 July) looks very much like the final panic sale from the public (two out of three times, massive volume after a prolonged downturn signals a reversal is close). I would be expecting to see a bottom within 5 to 7 days followed by a buying signal.
Good article.
Fact is that amazon has always been a discounter and never a premium brand. The original Fire tablet was launched on the basis of lower pricing (achievable by amazon's low margins compared to Apple and other people who are trying to make money this year).
The fire phone will do well once it is selling at a discount to an equally speced samsung, sony, moto and HTC. I just can not see any comparision between the Fire phone and an equally priced Sony Z2.
What surprised me about the article was the graphic and the fact that fuji film were doing so well. Refreshingly analogue in a sea of digital products
Better watchout, Zacks have changed their rating to sell.
In addition, revenue and earnings growth appear to be decelerating.
No position.
I wouldn't go as far as calling the end of the world. After all debts don't need to be paid and certainty they don't need to be paid in the currency (value) in which they were borrowed (and as for US dollar denominated sovereign debt it is unlikely that most of it will be).
However, that does not mean that debt is not a problem that can and will reduce the living standards of many. Like anyone who is over leveraged, everything still feels fine as long as their is still access to further credit (i.e. their are still willing lenders). School fees get paid, gas bills are covered, interest payments are made. Then what appears to be all of a sudden, credit dries up, sovereign interest rates spike and there is talk of crisis.
History is resplendent with once great societies that were wounded by debt. The crisis is only the final and inevitable consequence of political failure to align expenditure with income. And it is only a crisis - not an end to the world - which results in hard decisions being forced on a debtor (by markets or creditors) and a redistribution of wealth within the debtor entity.
It is not an end to any world, as those in Greece, Cyprus and Iceland will testify.
Sounds like a long time to wait to do a carry trade.
PE is 20.5 based on 12 month trailing earnings (up to march 2014).
TTM EPS is RUS41.80 (=$1.17) (RUS 1 = USD 0.028)
Revenue growth has been 40%, 37%, 36% over the past 3 quarters (current quarter last)
Price to earnings growth (PEG) is 0.55 on a historic look back basis (TTM PE, TTM growth).
A PEG of 1.0 would probably be appropriate at prevailing Russian interest rates of 7.5% and probably 1.2 to 1.3 if interest rates should fall back to 5.5%.
Of course a PEG of 1.6 to 1.8 would be a useful target in that many growth companies top out around there (which I perceive to be over valuation).
Looks like Yandex found a bottom at 21.70. I've made a small buy at 23.20 on the way up. There's still at 30 to 40% chance there will be more selling tomorrow.
Last time I picked the bottom it was 28 and I got in at 29 and got stopped out.
I still think that Yandex will recover to 45 and breakout of 45 at some point this year. I hope that I don't get stopped out again.
It will be interesting to see over time what premium investors are prepared to pay for the right to vote.
I have no expectations about the whether the price will go to $20 or not. The future is not only unknown, it is unknowable.
I would agree that there is support at the $25 to $26 level. But also the market does not like uncertainty, and the spectre of war, sanctions and energy embargoes tend to create more emotional selling than rationale buying. In addition, unless this week marks a turning point, the general market is in decline, if the correction continues then those (stocks) that are most uncertain will get hit the most.
If it comes down to $20 I will be happy (emotional) and try to pick a bottom with a tight stop. If it doesn't then I will buy on the way up (because the probability of a rising market continuing to rise is higher than the probability of a falling market turning around to start rising. I won't get the bottom, but I'm all right with that, that is not my aim, my aim is to buy when the odds of it going up are very high and the amount that I will lose before I realise that I am wrong is very low.
The market can stay irrational for longer than I can stay solvent. But if you have a good position sizing strategy, such that you will be around for the time the stock bounces back, you will do OK.
I was stopped out with a 4.5% loss on my position. I may try again when the stock hits $20 (if it does), or given that the stock is worth over $40, buy up on the way from $27 to $32.
You can never tell how low a great company can go.