Wednesday, September 16, 2015

Organic Food - Long term trend

What we call Organic Food was called Food by your grandparents. It is a trend that will continue to show up now, in my opinion.

A couple of exemplary companies at the moment on my radar that I may miss being on the sidelines due to the Infosys nature of stock (high growth but equally high PE multiple).

First is in the United States. Where Food Comes From Inc. It provides Organic Certification, Labelling, Third Party Verification

WFCF is still a small cap at 65 Million USD market cap. The company will be engaged in McDonalds tracking and verification program and has lions share of market.

On the face of it quite dear, 6 times revenues and 100 times earnings.

Second is an Australian company, just noticed today, makes organic baby food (Just as no patient bets low on brain surgeon, no parent bets low on infant food).

The company is wiping out its competition with revenue growth of 150% in the previous year and net profit growth of 450%. The company came with an IPO last year and is 7 times up since. A rare IPO stock that was not overpriced. Needs more research. Bellamy is nearing 800 million MCAP, 5 times revenues and 85 times earnings. If the growth continues at even 1/3rd of the current years' pace (always hard to look ahead), then the stock looks quite cheap. Company has positioned itself for growth in Hong Kong and China.

What is evidently clear is the potential of the sector.

Click to Enlarge

Friday, September 4, 2015

Tart Chart

In a bear market, stocks may seem like mouthful of hot molasses, too sticky to spit out, too hot to swallow.

While claims of creating material wealth are true in equity markets, emotional impact on full time dedicated investors is not well studied and reported. It pays to be a bull as markets are mostly up rather than down over long term.

To be informed is to be empowered.

You should know, if you are not already aware that equity indices may or may not move for 11 years (eg: Sensex) or 16 years( eg: Dow Jones) or even 25 years (eg: Nikkei) except for 1% of stocks (that we may or may not own). Person who has not read history is like a child, doomed to repeat mistakes (of throwing in the towel, or himself from the window :-))

Some of the charts below will provide perspective on bear markets.

I just tweeted that a typical, low intensity bear market (3 on Richter scale) typically lasts 6-18 months. Not sure which part was horrendous for my friend Padmashankar, comparison with Hitler's gas chamber or duration of bear markets. I assumed duration, if 18 months is long and painful, then one is likely to end up in lunatic asylum if one is trapped in a 10 year bear market, hence this post.

Lets pay homage to the mother of all, Dow Jones in 1930s, several years long, down 86% from 375 to 50, the great bear market (read suicides)

Note the 18 Year consolidation (read pain) from 1906 - 1924 and 16 Year consolidation (read suffering) from 1966 - 1982

25 Year Bear market since 1989 and counting in Japan......

Closer to home, Sensex experienced negative returns over the 11 year period 1992-2003

Poem I wrote for Bear Market

I am a simple bumpkin with no minions
but dream big of billions not just millions

I carry a dream in my heart 
while working on a stock market chart

To quit my day job
no responsibility to mob

but this bear market
is upsetting my bread-basket

Many say, the market is no art
a monkey can throw dart

But those who wither the storm
shall rise to be re-born

We live in the noons of tomorrow
not stirred with bear market sorrow

Its just the beginning the journey to billion
Of my greedy addiction and accumulation

This stock market chart shall not thwart
my formidable army will tear the fort of bear apart