PSR — Trading Ideas on TradingView

Tim's Fundamental View Layout Here is the way that I view any stock for an initial analysis to get an idea of what the market is valuing and viewing the company. I first look at the free cash flow, so that is directly under the price chart. Free cash flow is the life-blood of the company and can be used to pay dividends and to reinvest in the company to grow the top line or to buy back stock. Next I look at the PSR or Price-To-Sales-Ratio. This ratio is paramount for me since the top line shows up first for companies and is the starting point for analysis. Companies with low or no sales growth get priced very differently from companies with high growth. Start with sales growth in your analysis. There are many great books on the topic written by Kenneth L. Fisher, the creator of the tool. Next "Avg Basic Shares Outstanding" to see if the company is constantly diluting investors and raising capital or hiding expenses by giving out stock options each year. Old companies in slow growth industries tend to buy back stock and growth companies grow shares outstanding and is a strong headwind for investors. Next is "Long Term Debt"... which is another extremely important variable to look at with any company. In the long run, debt is the cheapest capital since you can pay it off cheaply but it can also drag down a company when the future is uncertain and unpredictable. Companies with predictable sales and growth often load up on debt which enhances returns for equity owners, but increases the risk long term. Jet Blue NASDAQ:JBLU is case in point for this as in 2000 before the pandemic it had a $5 billion market cap with $1 billion in debt and now it has over $8 billion in debt and the market cap is down to $1.5 billion. It is very difficult to get out from under such a heavy debt load. Debt can be "death" for any company if overused. Next is "Revenue" graphed annually. Essential to see if inflation impacts sales growth or if it can't keep up with inflation. The last 5 years was between 20%-50% inflation depending on the industry so if a company doesn't have higher revenues by at least 20% since 2019, then this reveals a weakness in their pricing power which is a very competitive market with likely declining or low margins. Last is "Market Cap". It is always good to know the market capitalization of any stock that you own. It is the foundation for understanding if any investor would ever want to buy the whole company and what would it cost to buy it and what are the "returns" from owning the whole company. I hope you can copy this layout for your own so you too can have a one-page view of the history of a company to help you get your mind around its valuation and potential along with understanding the risks all in one, easy picture.

$NKE Nike, Inc is finally back to CHEAP-ENOUGH levels Many years ago I had drawn this 1.7-1.3 level in the PSR (or Price-to-Sales Ratio) for NYSE:NKE and the recent smack down for NYSE:NKE stock has put it within reach of the 1.7-1.3 X Sales zone. The RETURN for shareholders has been negative for the last 7 years in NYSE:NKE when adjusted for inflation. The stock is basically unchanged back to 2018 here (not factoring dividends). What is the point of this? When a stock gets sold down on bad news, there is an underlying level of value which will support it from that point forward. There are always portfolio managers looking to invest in stocks that have had solid long term fundamentals with rising sales and earnings and a nearly recession-proof business model. The opposite is also true that there are NO BUYERS for a stock once it gets ridiculously overpriced and no one can justify buying shares are high prices. The only hope you have at that point is for momentum to attract new buyers who aren't paying attention to valuation and because of tax laws that encourage people to hold on for long term capital gains tax rates to kick in for holding periods greater than 1 year. Thanks to TradingView for providing all of this high quality fundamental information AND for the ability to graph this data so we can visualize and see where the value is in the marketplace. The value is down here in NYSE:NKE shares so it is a good time to start buying. Cheers, Tim 3:47PM July 1, 2024 76.67 last +1.30 +1.72%

Tesla Valuation back to 2010 IPO $TSLA has had wild swings in valuation from under 2 times sales and over 20 times sales in the past few years. Granted, you have to know the future to know what the sales are, but in 2019 it was insanely cheap just as the Model Y was just starting to sell. The MODEL Y is why Tesla has done so well in my opinion. It has dominated and is still growing insanely fast and taking out the competition. The car is amazing. From the first moment I drove it using Turo out in the snow in Montana in 2020 I knew it was a world-car and it was in the largest segment which is Crossover SUV. After the Model Y started dominating, the valuation of Tesla then got up to over 20 times sales, which is beyond insane. Markets provide you with opportunities to buy when things are cheap, but there are uncertainties. Then the market provides you with opportunities to sell when things are expensive, but the momentum and price gains are so strong that it is tempting to hold on. The best thing you can do is learn how to act in both situations. Also, it is OK to watch a stock go higher AFTER you sell. Let go of the need to think you are the smartest person in the market. The person buying from you deserves the right "to be right" for awhile too. So where does $TSLA stand now? In the middle between expensive and cheap. If Tesla goes lower, it gets cheaper and as sales growth continues it will drive the PSR down near 5-4 within 12 months. Will Tesla see 2 times sales again? I doubt it because at 2 times sales before it had a lot of debt ($10B and there were survival concerns at that time along with a VERY LOW investment grade rating in the junk-status category.) Now the opposite is true. Tesla has billions in cash and enough capital to buy back stock and still meet their capital spending for many years. To step back and view the situation from a rational perspective, you have to look at the extremely high valuation that Tesla reached in the bubble of 2020-2021-2022. Step back and look at the long term valuation and trends. Stay tuned. Tim 9:20AM-9:37AM Thursday, November 10, 2022 184.24 last $TSLA

$AMZN - Amazon is "OUT OF RALLY TIME" using Time@Mode Amazon has rallied for 15 weeks into last week's close after accumulating at the mode back this past fall for 15 weeks. In other words: Amazon has "run out of time". Once Amazon blasted off on its previous earnings report back in October, it kicked off a 15 week rally which ran far beyond the rally that was implied by the previous move from $766 (where it lingered for 17 weeks in 2016 and had a 22 week rally out of that accumulation). A move from $766 to $980 was 29% and the implied rally from $980 was also 29%, but it ran up over 50% (see chart). Now that $AMZN has reached $1498, the PSR reached 4 times (an extreme reading) while the free cash flow yield has fallen to 1%, which means that the $7 billion in free cash flow is only 1% of the $700 billion in market cap for Amazon. Growth over the coming decade will help drive up that yield, but right now that is the return you would earn if you took Amazon private. Using the Time@Mode methodology, together with Key Earnings Levels stemming from quarterly earnings reports and raw and relative valuation analysis, we can see here that Amazon has "RUN OUT OF TIME" on a weekly basis for this rally and would only expect it to move sideways to down over the upcoming 15 week time frame as a new level of consolidation builds as the fundamentals "catch up". For now: It is opportunistic to sell short $AMZN with 5%-10% downside targets. Cover and re-short on 75% rebounds as many times as possible for the next 14 weeks. Tim 12:41PM EST February 7, 2018 $1439 last $AMZN

Tesla Motors long term valuation multiples are declining fast Tesla is difficult to value and the opinions are very strong on both sides of the argument of how TSLA is valued. The valuation is dropping fast, that is for sure. Given how sales have skyrocketed from nearly zero to $3 billion has dropped the PSR from over 20 on a few occasions to under 10 for this year 2015. Tesla is losing money as they invest in their business, grow infrastructure, build supercharger stations and provide unparalleled customer service, and build capacity to keep driving down the cost of building a Tesla. If you look at the long term, in this case 57+ months (since that's how much data we have on Tesla so far), and if we assume sales can keep growing at the rate they are growing, then TSLA will be very cheap in 4.6 years. We could give Tesla a PSR of 2 after 4.6 years, then the stock would easily be a double from it's current levels, which is a 15%+ return per year. I added the "half-speed" trend line for TSLA to now because it encompasses when TSLA first started selling the Model S up to the peak price for TSLA shares over $290 last summer. If we look at the pace of the trend from the mid-point of that advance, then TSLA is still on track and that level was tested in the recent pullback earlier this year. The current news about guiding down production from 55,000 units per year to 50,000 together with the recent "hacking success" into Tesla cars, should provide another buying opportunity over the next weeks and months. Cheers.

CALM: Trading at a major discount This stock is coming up from a strong base, acting as a bastion of strength in this market. Dividend investors would be glad to add this to their portfolios here I'm sure, and I wouldn't mind either. There's a nice techical entry if we're offered with prices inside the green zone in my chart. There is an abundance of technicals suggesting this is a good buy, so I wouldn't hesitate on reccomending it to anyone. We have the yearly moving average below price, as well as a great valuation right here, as derived from the PSR readings, which give clues about 'fundamental support' levels in this chart. I'd reccomend allocating 6-7% of capital in it, based on the volatility, which with a 3.85% yield, and trading at 1 time sales (PSR) -despite the high P/E ratio- makes it an attractive long term entry. Cheers, Ivan Labrie.

Walmart -WMT -Oversold & Valuation Compelling at 0.50x's Sales Walmart has bottomed consistently at 0.50x's Sales since late 2012, with each swoon holding perfectly at that level. Given the size of Walmart and the breadth of shareholders and analyst coverage, it is logical that investors have stepped in and defined a specific level of valuation for which they will continue to buy shares. I have done this analysis in GM shares too. Look for the link below. On Friday, I published a chart, but without going into the specifics of this 0.50 level of PSR, so I am producing this chart again with this additional detail. The ENTRY here is right in the middle between the upside target of 0.55x's sales and the base at 0.50x's sales. Therefore, the risk is equal to the reward. But what would make you want to take even odds is that the probability of reaching the target is greater than reaching the support. Why? Because the chart has been coming down steadily and the overall market, as measured by the S&P500, has gone on back to the all time highs. There is a divergence here that spells an opportunity. I love to buy technically ugly and oversold charts when the valuation is compelling. The stop loss I listed before would have had you selling right at the key 0.50x's sales level, which isn't logical, so I am amending that and I would suggest adding to this position with a stop at 72-71 instead of at 75. The trade becomes more and more interesting as the price drops to the $75 level because the upside becomes 10% instead of 5% and the risk remains low. Earnings are due on 5/19 and that may raise the level where the 0.50x's PSR level is, so pay attention closely this coming week. All the best, Tim Saturday 10:49AM EST, May 16, 2015 WMT 79.24 last.