Thank you!
I wanted to start off first with a genuine thank you for the warm reception of my first newsletter on Sector Screens. The post has 3,000+ views and my tweet posting the link has 140k+ impressions. Also a special thank you also to the 260+ subscribers that signed up!
Overview for Screens
For this newsletter, we will be looking at stock screens across value, growth, and technical parameters. I would highly advise viewing this newsletter on a PC, tablet or laptop for best viewing experience.
Each one of these screens will be sorted by lowest Enterprise Value (EV)/2022 Expected Gross Profit (GP) multiple unless stated. A new addition this time around is I’ve now pulled data for 2023 projections but won’t be judging off those - just gives a better idea into is this companies growth sustainable?
I’m keeping my commentary of each screen light past top level observations, the goal is thought generation - I’m not an expert!
I outline how this data is taken in my first introductory newsletter:
Data comes from first Yahoo Finance average analyst estimate (preferably 5+ analysts). I’m a big median over average guy but sadly I’m just a retail investor so this is what I have. I always check the numbers with Seeking Alpha because Yahoo isn’t perfect by any means. I’ll also use Koyfin as a source but if they all don’t have data I’ll then use company guidance.
Market Cap data comes from google finance function on google sheets, Enterprise Value (EV) data comes from secondary sources outlined above.
For these screens, it will be a blend of different parameters and moving forward I’m open to any specific suggestions! I’ll have four main sections where I’ll do 3-5 specific screens around the general themes below:
Growth
Value
Technical (Moving Average, One Month & Three Month Performance)
There’s two main assumptions that should absolutely be stated before we begin:
I’m assuming the financial information gathered is correct - Please let me know if something is off for a company I’d be happy to look into it further and correct it.
I’m assuming with gross profit projections their gross margin won’t change - This obviously isn’t reality as margins expand/contract over time as a companies business changes/scales but this is the best I can do (as of now at least).
Gross Margins is also a metric that can be left for some company interpretation.
I leave basically all of my work in here for full transparency - fully up to you to have some fun with the trendline equations and do your own projections etc. The sheet that I do all this with is public. This is not investment advice!
Growth
A quick look at the top 25 highest expected 2021-2023 revenue CAGR which is what I will be defining as my main "growth” parameter:
Screen 1: High Flying Growth
Parameter(s):
2021-2023e Revenue CAGR > 60%
Screened Companies: Katapult (KPLT), BarkBox (BARK), Live Nation (LYV), Ozon (OZON), Opendoor (OPEN), Roblox (RBLX), Upstart (UPST), Metromile (MILE), Futu Holdings (FUTU), Oatly (OTLY), MP Materials (MP), Lion Electric (LEV), Stem Inc (STEM), Up Fintech (TIGR), Nio Inc (NIO), Snowflake (SNOW), DLocal (DLO)
Quick Take:
Great group of companies here that all deserve to fetch a high EV/GP forward multiple. Live Nation is recovering from decimated 2020 revenue so not fully what it looks like. Roblox, Upstart & MP Materials look the most intriguing here to me.
Screen 2: High Margin Growth
Parameter(s):
2021-2023e Revenue CAGR > 40%
Gross Margins > 50%
Screened Companies: BarkBox (BARK), Crowdstrike (CRWD), Fiverr (FVRR), Golden Nugget (GNOG), Lightspeed (LSPD), Weedmaps (MAPS), Magnite (MGNI), Monday.com (MNDY), Pinduoduo (PDD), Pinterest (PINS), Roblox (RBLX), Shopify (SHOP), Skillz (SKLZ), Snap Inc (SNAP), Snowflake (SNOW), StoneCo (STNE), Teladoc Health (TDOC)
Quick Take:
Weedmaps looks extra appetizing due to getting smacked around -14% the last trading day but I’m a fan regardless. Again Roblox looks good here along StoneCo & Pinterest in my opinion.
Screen 3: Value Among Growth
Parameter(s):
2021-2023e Revenue CAGR > 40%
EV/2022e Gross Profit Multiple < 20x
Screened Companies: BarkBox (BARK), Burger Fi (BFI), Coupang (CPNG), eXp World Holdings (EXPI), Shift4 Payments (FOUR), Golden Nugget Online Gaming (GNOG), Katapult (KPLT), Live Nation (LYV), Weedmaps (MAPS), Magnite (MGNI), Opendoor (OPEN), Ozon (OZON), Pinduoduo (PDD), Pinterest (PINS), Peleton (PTON), Roblox (RBLX), Redfin (RDFN), Skillz (SKLZ), StoneCo (STNE), Teledoc Health (TDOC), Zillow (Z)
Quick Take:
Here I guess was a great way of showing how discounted EV/GP forward multiples eCommerce and Real Estate companies get! I’m not surprised to see Fintech show up strong here as well.
Screen 4: High Gross Margins Combined Growth Parameters
Parameter(s):
2021-2023e Revenue CAGR > 30%
Gross Margins > 70%
EV/2022e Gross Profit Multiple < 40x
Screened Companies: Airbnb (ABNB), Datadog (DDOG), Figs (FIGS), Fiverr (FVRR), Weedmaps (MAPS), Mongodb (MDB), Monday.com (MNDY), Olo (OLO), Pinterest (PINS), Roblox (RBLX), Skillz (SKLZ), StoneCo (STNE), The Trade Desk (TTD)
Quick Take:
Screen 5: All Around Combined Growth Parameters
Parameter(s):
2021-2023e Revenue CAGR > 45%
Gross Margins > 30%
EV/2022e Gross Profit Multiple < 40x
Screened Companies: BarkBox (BARK), BurgerFi (BFI), DraftKings (DKNG), Futu Holdings (FUTU), Golden Nugget Online Gaming (GNOG), Katapult (KPLT), Lightspeed POS (LSPD), Monday.com (MNDY), MP Materials (MP), Oatly (OTLY), Ozon (OZON), Pinduoduo (PDD), Peloton (PTON), Roblox (RBLX), Sea Limited (SE), Skillz (SKLZ), Snap (SNAP), StoneCo (STNE), Teledoc (TDOC), Upstart (UPST), Zillow (Z)
Quick Take:
Fintech and eCommerce are two of Fintwits favorties sectors (mine as well) and I think this screen can give a good argument why that is. Peloton & Skillz are some interesting battleground stocks that look pretty good through this lens.
Value
A quick look at the top 25 cheapest companies by EV/2022e Gross Profit multiple which will serve as my main “value” parameter:
Quick Take:
I’m not a huge value investor or anything because I think for the most part these companies are cheap for one reason or another (lack of MOAT, bad management/execution etc). But, no one’s saying you have to buy and forget these companies, I don’t hate on the value investing game it’s swing trading at the core which I’m a fan of. I also enjoy how this is mostly obscure consumer brands, retail or restaurant chains.
Screen 1: Cheapest Continuous Growth
Parameter(s):
Any year 2021-2023e Rev Growth > 0%
Screened Companies: Acushnet (GOLF), Camping World (CWH), Canadian Solar (CSIQ), Casper Sleep (CSPR), ViacomCBS (VIAC), ContextLogic (WISH), CVS Health (CVS), iRobot (IRBT), Lovesac (LOVE), Petco (WOOF), Pure Storage (PSTG), Purple Innovation (PRPL), Red Robin Gourmet Burgers (RRGB) Stellantis (STLA), Turtle Beach (HEAR)
Quick Take:
Market not a fan of the mattress industry it seems! iRobot, Red Robins & Camping World look the most interesting if any here to me.
Screen 2: High Margin Value
Parameter(s):
Gross Margins > 50%
Any year 2021-2023e Rev Growth > 0%
2021-2023e Rev CAGR > 10%
Screened Companies: BarkBox (BARK), Bumble (BMBL), Casper Sleep (CSPR), ContextLogic (WISH), Crocs (CROX), Electronic Arts (EA), Golden Nugget Online Gaming (GNOG), Lovesac (LOVE), Pinduoduo (PDD), Poshmark (POSH), Pure Storage (PSTG), The RealReal (REAL), Uber (UBER), Weedmaps (MAPS), Ziprecruiter (ZIP)
Quick Take:
Ziprecruiter was a recent 2021 IPO so interesting to see it have a favorable valuation currently. TheRealReal, Lovesac & BarkBox look the most interesting to me here.
Screen 3: Well Rounded Value
Parameter(s):
Gross Margins > 20%
Any year 2021-2023e Rev Growth > 0%
2021-2023e Rev CAGR > 25%
Screened Companies: BarkBox (BARK), BurgerFi (BFI), Callaway (ELY), Golden Nugget Online Gaming (GNOG), Katapult (KPLT), Live Nation (LYV), MGM Resorts (MGM), Payoneer (PAYO), Pinduoduo (PDD), Poshmark (POSH), Purple Innovation (PRPL), The RealReal (REAL), Uber (UBER), Weedmaps (MAPS), Zillow (Z)
Quick Take:
One of my favorite long holds showing up here favorable in Callaway. Katapult feels unloved due to non-prime lending and negative SPAC stigma potentially?
Technical
Taking a look at the furthest distance between a companies 50 & 200 day moving average on both sides. This shows what I think is a great snapshot how overbought or oversold a stock is without actually looking at RSI, MACD etc.
Now I’m going to look at the 15 best and worst 3 month performers:
Full disclosure I won’t be offended if you don’t find any of this section useful. This is blending technical and fundamental analysis together which would fall more for traders.
Screen 1: One Month Strength With Strong Fundamentals
Parameter(s):
One Month Performance > 0%
2021-2023e Rev CAGR > 20%
EV/2022e GP multiple < 20x
Screened Companies: AMD (AMD), Alphabet (GOOG), Amazon (AMZN), BurgerFi (BFI), Coupang (CPNG), Crocs (CROX), Daqo New Energy (DQ), Etsy (ETSY), Facebook (FB), Honeywell (HON), JD.com (JD), Lululemon (LULU), Peloton (PTON), Twitter (TWTR), Ziprecruiter (ZIP)
Quick Take:
BurgerFi, Facebook, Crocs & Etsy look the strongest here in my view. DQ has a classic China discount but still showing strength recently.
Screen 2: One Month Strength + Moving Average Turnaround + Strong Fundamentals
My final screen is bringing all the witchcraft together!
Parameter(s):
1 Month Performance > 0%
50 day moving average below 200 day moving average
2021-2023e Rev CAGR > 10%
EV/2022e GP multiple < 30x
Screened Companies: BurgerFi (BFI), Chegg (CHGG), Coupang (CPNG), JD.com (JD), JinkoSolar (JKS), Mercadolibre (MELI), Nice (NICE), Peloton (PTON), Texas Roadhouse (TXRH), TheTradeDesk (TTD)
Quick Take:
Of all the screens in this newsletter this is the one I’m most looking forward to tracking future performance for obvious reasons haha. If Texas Roadhouse goes on a tear I think we now know why! Mercadolibre, Coupang & BurgerFi look the most interesting here to me.
Conclusion
This is a newsletter topic I’ll have fun with tracking the screened companies performance over the quarters. In my opinion I’ve outlined what I think is some quality thought generation but it’s all up to you what you want to do with this!
I really appreciate it if you read through this, bear with me on any mistakes (I’d be happy to take a look at fix it) and let me know if you’d like to see some specific screens. I’d be happy to post some on my twitter in the meantime until the next general screens newsletter in Q4.
- Sean