Journey from deep-hatred (नफ़रत) to deep-love (इश्क़) creates massive valuations re-rating from below 1x sales and 1x book value to anything from 5x to 20x sales and a multiple of book value.

On this auspicious day of #GuruPurnima, happy to share an easy to read and an exceptionally worthwhile investment. I plan to make a thread that will hopefully help us invest and live better. Thank you @awealthofcs 🙏🏻

Experience has taught me that less is always more when making investment decisions. Simplicity trumps complexity. Conventional gives you much better odds than exotic. A long-term process is more important than short-term outcomes.

And perspective goes much further than tactics. Tactics are useless to investors in a matter of days—sometimes in a matter of hours. But perspective is something that stays with the investor for a lifetime. It allows you to adapt to the changing market and economic landscape.

While keeping it simple won’t make it any easier to predict the future—no one has a crystal ball—it can give you the necessary capacity to make rational decisions, no matter what happens next.

Perspective is so important because, without it, even the most intelligent of investors can be ruined from a lack of self-awareness in their own abilities. Investors that fail to put the news or market moves into the proper context....[1/2]

All these are Pharma sector companies. Company F consistently reports -ve cash flows. It's stock price never compounded. All other examples reported multi-years of +ve cash flow generation. These stocks have been multi-baggers over the years.

Focus on Cash Flows vs News Flows.

There are many such from @oraunak @soicfinance @jeevanpatwa and https://t.co/208eQbYKEF #22 by @tusharbohra

My advice would be - invest time in researching how and why synthetic biology and #biotechnology be disrupting many petro derived chemicals, textiles and other materials.

1/ @mjmauboussin's book Expectations Investing is a masterclass in valuation & strategy

His framework uses price-implied expectations to assess companies, an elegant way to invert valuation

https://t.co/kESplMN3nW

To practice these concepts, I wrote a case study on Chipotle⤵️

2/ Chipotle is the leading fast casual restaurant chain across the US, with almost 3,000 owned & operated locations

They benefit from strong unit economics and a trusted brand

We'll discuss consensus estimates, competitive landscape, and expected

3/ We must first identify the price-implied expectations based on key value drivers

After finding the consensus estimates, investors can seek opportunities in the expectations - looking for a divergence from the market's assumptions

Let's start with Chipotle's sales growth

4/ Chipotle has grown revenues from $3.9B to $7.55B over the past 5 years, at a 5 year CAGR of 14.1%

Analysts estimate a 13.7% consensus growth rate based on 5-7% same store sales growth, 8% additional store openings per year, and steady digital sales contribution

5/ Next is operating profit margin, which measures profitability from core operations

Chipotle has slowly been growing its margin, now at 10.67%

Analysts expect high margins of 15.75%, with incremental profits from digital orders and unit-level margin growth contributing

@soicfinance @suru27 Indeed. For later, industry/sector has to be within your circle of competence to judge the turnaround correctly.

Because according to Warren Buffett
"Both our operating and investment experience cause us to conclude that turnarounds seldom turn"

@soicfinance @ishmohit1 Learning and taking inspiration from you sir..🙏🏼🙏🏼

When you think a marquee leader in a sector is richly valued, discounts the distant future, is over
owned and has run its course, take a clean break.

Sell and go away. Don't seek lesser opportunities in weaker companies.

@_CreatingWealth sure, only request. Plz do not take it negative. Get over metric like PE, even if use it , at least take cash flow based PE. Many times, it would make worst investments attractive n decent one unattractive. It has lot of bias, limitation n constraint. 1 must know before using it