I’ve been working on some research lately that I’m ready to share with you. The crash isn’t as universal as most people think. In fact, there’s a group of stocks hit harder than any else. Any guesses what they are?
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I’ve been working on a Youtube video that I should release before long, but I thought I’d give you a little preview today.
Back in October or November, I was talking about how companies that have Price/Sales (P/S) Ratios > 20 might be in trouble.
Specifically, I was talking about high-flyers that were over $50/share.
I worked with an analyst to pull a list of these stocks this week, and I had 104 total companies on the list.
On November 1, 2021, all 104 companies had a P/S ratio over 20.
When we look at the crash that has happened over the last four-plus months, a lot of people want to know what stocks were hardest hit.
Well, the answer is those 104 companies!
Some of them you’ve heard of, like Tesla (TSLA), Docusign (DOCU), Snowflake (SNOW), and Zoom (ZM). A lot of them are companies you haven’t heard of.
But on average, that list of 104 stocks is down 44.85%!
And 39 of the 104 stocks are down over 50%!
Now, if you’ll notice, a lot of those companies are also the ones that inflated at hyperspeed during the post-pandemic recovery.
ZM, DOCU, a whole lot of medical and biotech companies… these were all companies that many investors believed would win BIG because of the pandemic.
But the P/S ratio never caught up — a pretty likely sign that the companies are overvalued.
I was on Ask the Pros Friday, and Roger Scott jumped in when I was talking about this to tell me how much he was happy I was talking about this.
So many of these stocks were unnaturally inflated by the pandemic — and Roger even pointed out, many of them were Cathie Wood ARK stocks.
They were all high-tech high-flyers that people pumped their relief checks into when everything was sky-high.
Right now, the proof is in the pudding with these stocks.
But the good news is, downturns like this distinguish the traders from the people who probably won’t make it too long in the markets.
If you’ve taken some licks lately, you shouldn’t be ashamed. As long as you’re ready to pick yourself up and dust yourself off, you’re better off than a lot of these folks who checked out a long time ago.
My point in all this is simply to say: yes, some stocks have been severely beaten down lately.
But I still believe we’re at a bottom and about to see some growth. Roger agrees with me.
And as soon as we really turn around, that’s when the fun begins.
Jeffry Turnmire and InvestPub do not provide investment advice. Trading involves a substantial risk of loss and is not suitable for all investors. Many traders fail and you should not trade with money you cannot afford to lose. If you need personal financial advice, consult a financial advisor.
Daily Profit Publishing and Jeffry Turnmire do not provide investment advice. Trading involves a substantial risk of loss and is not suitable for all investors. Many traders fail and you should not trade with money you cannot afford to lose. If you need personal financial advice, consult a financial advisor.
We are not licensed to provide you personalized investment advice. Nothing in these communications should be construed as personal investment or financial advice.
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