Keywords Studios Share Discussion Threads

[jamesjjj] 28/6/2018 08:16

scooper what I mean is that the share has become popular and well known and as a result will tend to attract a proportion of weak holders which tend to buy but also panic sell causing volatility.It is similar to something being tipped whereby it rises quickly but does not always sustain it. In an ideal situation buying shares that are less noticed and of good quality can produce spectacular gains. Look at KWS technical chart at its early rises and see how the rise is more smooth and then becomes more choppy as the stock becomes popular.
KWS is a good share with great potential in a strong sector DYOR

[villarich] 28/6/2018 08:13

Hi jamesjjj, thanks for taking the time to send that message. I think you're spot on with verything you've said. Going after the high PE stocks has changed my results massively too.I'm always happy to share knowledge so feel free to PM me any time and I'll return the favour :-)

[scooper72] 27/6/2018 21:37

Jamesjjj - when u say it is a little crowded, what do you mean?

[jamesjjj] 27/6/2018 20:16

Villarich, my point exactly. PE on its own means nothing except for the fact that a high PE may mean potential. Profit and EPS are the fuel of a company. Yes of course high PE companies can go down massively in bad markets or profits not meeting expectations, but then so can low PE companies. That in itself offers no protection. There is also another point missed here , that being that high PE companies tend to keep breaking into new highs which can lead to newer further highs as there are less people willing to get rid of shares at new highs as less are holding a loss and there is no overhang. I also have read Minnervini and I firmly believe that as he says there winners or laggards. If they are not trending up you are either wasting your money or or time. I can only speak from my own experience and I have found choosing growth stocks and most with a high PE has transformed my trading. Of course there is risk. But that is why risk management is essential. It is more important not to lose money than to make it. Selling losses before they get too big is the key.
KWS is at the mo an upwarding trending stock and as such I was happy to add at 1664.
It is in a good sector that other companies are doing well so happy to hold but if the technicals showed too many red flags I would be out no matter what unless the situation changed further down the line.
I am hoping that the recent drop shook out some weak holders giving more opportunity for a rise. The only problem with KWS is that it is a little crowded hence the volatility. I would have preferred more constructive set ups and consolidations before rises. Having said that if it does make a new high from a good more steady base this stock has the potential for a 20% plus rise in a short period,
Villarich as you seem to have the same methology and thinking as myself if you would like I can PM you with stocks that I see as promising and you could maybe do the same.

[tonyt10] 27/6/2018 19:37

Villarich, well said. The point isn’t about being wary of high P/E companies but sussing out companies which will continue to deliver good returns and have a market stronghold with clear trajectory to gain market share and high potential.
KWS are just that. And whilst it has had a really hood rise, it’s been up and down over the last 9 months or so. As someone pointed out it was 1650 in Oct 17, so despite the price flux it’s almost breakeven since then and does not take into account the continuous strides the firm is making.
Remember KWS have 7 different offerings, and work with the top 23 of the top 25 gaming companies in the world. At the same time no single customer accounts for more than 10% of their revenue. If you look deeper into their accounts, they have a sound base, solid forecast and massive potential.
With such a fragmented market, there wil always be the opportunity to keep snapping up companies with groundbreaking tech at a low price.
This is a volatile stock but if people are willing to be patient, there’s a lot of upside here. As mentioned before my Christmas target is 2500p however I see KWS beating that with some strong acquisitions.

[mad foetus] 27/6/2018 19:12

https://www.trustnet.com/news/820083/fe-alpha-manager-lawson-my-three-uk-stocks-for-an-ever-changing-worldOne of them being KWS

[villarich] 27/6/2018 16:14

Massively!!

[pyglet] 27/6/2018 15:41

I think PRSM falls into this category

[villarich] 27/6/2018 15:28

I also think BOO is a bad example. They were hit hard by a short attack which accentuated the falls. The price had rises quickly and was due a cooling phase but not the drop that occurred. During that period they upgraded expectations three times!

[villarich] 27/6/2018 15:25

I don't think anyone is saying that a high PE is the only thing to look at. What we're saying is PE is a useless indicator on its own to determine whether a company is cheap or not.The nature of high growth, high PE companies is that any indication of a wobble in growth will result in heavy declines. That's what happened with ASC and BOO. The trick is to keep a look out for the early signs and sell out before the transition from growth stock to stalwart happens.Mark Minervini's book - Trade Like A Stock Market Wizard perfectly describes this process. He advocates buying high growth, high PE shares, often after they've more than doubled in price already, and hold them through their high growth phase before selling when they show signs of topping out.

[henryatkin] 27/6/2018 15:06

I do hold KWS by the way

[henryatkin] 27/6/2018 15:05

IQE is down 40% this year in spite of a high P/E and good earnings & sales growth. No company is immune from such falls

[henryatkin] 27/6/2018 15:00

Jamesjjj.... you also have to look at the other side of the game. ASC lost 70% of its value in 2014 with very high P/E. BOO lost 45% in 2017/18 on a high P/E and both BOO & ASC achieved increased growth in sales & earnings throughout. Could you honestly not get upset at such a loss if there was bad news such as failing to hit expectations. It can happen to the best of companies.

[villarich] 27/6/2018 12:58

Nail on the head mate! The concept of cheap or expensive shares doesn't form part of my investing vocabulary really. I buy into companies if I am convinced they can at least maintain EPS growth.

[mad foetus] 27/6/2018 12:56

I think you could say that over the last 12 months KWS has been in a shallow uptrend. It hasn't been that dramatic: the share price was over 16 lastOctober IIRC. It has been pretty constant though.

[pyglet] 27/6/2018 12:47

Despite the strong uptrend continuing I can't help but notice the 3 month graph in the header which shows we have risen only 50p overall in this timeframe.

[bamboo2] 27/6/2018 09:55

mf I have also added. Would buy more, but being cautious.

[mad foetus] 27/6/2018 08:36

Halfway to building a nice position here. Expensive, but you have to pay for quality and KWS is both quality and disruptive in a massive and growing industry.

[jamesjjj] 26/6/2018 22:57

Villarich, my own experience of trading is that high PE companies tend to do better on growth than low PE companies. My gains on shares have been almost totally with high PE companies. Historically evidence shows that nearly all superstocks made their big advances with high PEs. Some of the biggest advancers have very high pE which puts people off. Fevertree for example about a year ago had a PE of 60. It went up nearly 100% and now has a Pe of 70
Loop up had a Pe of 41 a year ago. A valuation that many magazines said was bonkers. A year later and it had gone up 213%.
The point is if you buy a Ferrari you expect to pay more but your chances of winning are also much greater. I would rather own a Ferrari going into a race than a mini even if the other is much cheaper.
A high Pe has very little bearing as to whether a stock goes up or not. Kws about a year ago had a Pe of around 33 ( not cheap). It has since gone up over 100% even allowing for recent drops.
On the flip side Laura Ashley about a year ago has a Pe of about 9 and paying a very high divi. A bargain you might think? Since then it has gone down over 80% and a PE of 5. Would anyone buy it?

[villarich] 26/6/2018 18:53

It depends how you define cheap. The traditional thinking is that if a company has a PE of less than 15 then it's considered cheap. But I tend to find that companies with low PE's are either big blue chip stalwarts who aren't going to double in price, distressed companies that are in the middle of a downturn or ones that have something in the background that is depressing the price eg fears of additional regulation.Looking at price to earning as a measure of value, you could say KWS isn't cheap. But this is a growth share and I prefer to look at past and expected EPS growth and PEG to see if it's cheap or not. The sweet spot for me is a share with a PEG of less than 0.66. That would suggest that expected growth is outstripping the market's current value of the share.

[tonyt10] 26/6/2018 17:11

Nothing ever goes in a straight line. I've liquidated other stocks to buy the dips here - now my biggest holding by far. I'm not a trader but I can easily see this hitting 2000 in the next few weeks before pullbacks. I expect continued growth with my TP of 2500 before Christmas.

KWS will continue to keep acquiring businesses and the games industry is only going one way. The diverse portfolio offerings and fragmented market means they are well positioned to grow exponentially!

Just need to be patient and let this do it's thing.

[scooper72] 26/6/2018 16:53

Point taken villa. But is it fair to say they are not cheap? Motley fool hidden winners which is one of the first places I read up on KWS a couple of years ago has them as a hold at the moment. But in the end if you are holding at 1850 and they drop to 1660 then the 'buy the dip' strategy can make sense. This is now over a third of my portfolio which is probably not what most people would teach or advise about investing. But so far haven't ever really lost on them. Wish I had never sold from 270 upwards.....

[scooper72] 26/6/2018 16:47

I really hope you are right tony10. Just some times feel I'm better off being pessimistic as it's Sod's law that things tend to go down if u expect them to go up. In the end none of us know. If we did then everyone would buy them.

[tonyt10] 26/6/2018 15:23

Fully agreed

KWS is a leader in the industry and I can see this having a better year than the last one. Steady stream of acquisitions and the nature of the business means the growth potential here is humungous.

Volatility is inevitable and whilst some might panic with the tree shake at times, the intelligent ones make use of the dips.

[villarich] 26/6/2018 15:14

There's no point in looking at PE imho. A high PE, on its own means absolutely nothing. I want shares on high PE's as it shows they're in high growth mode.