PNV has notably de-rated. Good – it was overvalued. But the stock is still on circa 12x sales.


It remains pretty aggressive by assumption. The burst of operating profit (below) was only because…


…expenses fell. Falling expenses is typically bad news in a growing business. There could be a few good reasons for it, but one has finite bandwidth, and it’s just not worth diving deep, once you’ve uncovered a few hairs. The simplest explanation is that expenses will simply step back up in the next period, in which case we are back to the “unprofitable growth” dynamic.


And in a rising rate environment, there’s no need to be there.


NAN is a growth stock where the EBITDA just doesn’t rise. And, trades at ~9x revenues. Like PNV it appears they’ve got good products, and have demonstrated good market penetration, but for shareholders… I do see where the bulls are coming from, but other plays are easier.



Supercheap had a once in a lifetime pull forward in demand for its products…


…which bolstered margins…


…but the business is now over-earning, and whilst the stock price is back at pre-pandemic levels, it faces a material revenue and earnings headwind.

The balance sheet is okay, neither good or bad.


But with mortgage rates going back up, and higher oil prices, the hit to disposable income for discretionary items is potentially quite material, which brings the balance sheet back into focus.


It is easy enough to argue that the valuations are misleading, due to over-earning, and that negative momentum can easily cause the share price to overshoot to the downside.

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