Member Info for ryanf

A question to simple Simon, regarding cash injection, they have £400m on the balance sheet and are profit making, £30m projected this year. So why would ASOS need a cash injection?

Buying opportunity if you ask me SmartPee. THG will rerate like Asos, just give it time. I'm long both Asos and THG, but difference is THG is loss making and Asos makes profit, which may be the reason for the difference in performance.

Anyone heard from Simple Simon recently? Last I heard he was saying asos had further to fall at 800p. What a clown.

Yea agree Anacott, you can tell Stevie has something missing in his life and decides to inflict his misery onto others. I hope he can only bring himself to do it on an anonymous Internet forum rather than to his loved ones.

Maestro, the term "growth" stock is misleading. THG is a fast growing unprofitable company. Sacrificing profit now for higher profits later on when revenue has already grown.

Comparing this with Asos, the market cap is fairly similar, yet asos is profitable and when the price was 800p, was being priced as if it will earn £30m-£40m in profit each year for the next 10 years (calculated using a DCF). Based on their profit from previous years, this is particularly low.

THG is a bit more difficult to value due to being unprofitable and growing at a fast rate. But realistically, if THG can continue growing at 25% over the next few years and can become cashflow positive, and let's say starts to earn £100m in net profit, this will be re-rated to somewhere around 500p again.

But the market is forward looking, so if we even have the prospect of improving margins, we will re-rate sharply. The rate of change of margin improvement will depend on how high we go. I'm banking on margins improving quickly when inflation subsides. Best of luck.

Buy alert from Goldy

Don’t forget the people that write these reports have an agenda and have the power to manipulate the news unlike the amateurs posting their actual fundamental analysis here.
Just another warning.

1000p acting as support. Expecting a move higher again over the next few days.

To think, everything in the asos world was ending when we hit 800p, and here we are, 25% from that point. I'll keep smiling as we climb.

When Goldy7 says sell, back up the truck.

Kent, take some time to watch this: https://youtu.be/NYoOlrVfwVM

It's so important you have a process. The channel above, everything money teaches you this. It will make you a much better investor.

The only good thing is that China and India are buying up all of the cheap Russian oil, and they have about 2/3rds of the world's population. So it may not matter what the US and the EU say or do...

Slater, no monster short, just calling it as I see it. Price at the pump is unsustainable and will come back down at some stage. Already seeing this in the SP. SP has formed a head and shoulders pattern so don't be surprised to see this fall further.

I never said it would go back to 250p, but it only has a a reasonable margin of safety at 250p.

I mean, good luck to you. Considering how emotionally you took my post, it sounds like you've got a lot on the line. Hope it works out.

Sooner you realise that these so called analysts are spoon feeding bullsh*t to the masses for their own benefit, the sooner you'll actually make money in the markets. How much higher did you really think oil would go? The prices are unsustainable, and anyone who bought BP at over £4 needs to get their head checked.

BP at £2.50 will be a buy again.

Nice post econ. Always trying to learn more.

I assume when you say 'zero sum gain', you mean 'zero sum game'?

Therefore you're questioning whether asos can only improve margins if oil goes down?

Predicting the macro is very difficult. I'm not going to pretend that I know the full implications of oil going up or down will have on the economy. But naturally, it makes sense that if prices at the pump fall, consumers have more money in their pocket.

If oil goes down due to demand destruction, then yes that isn't a good sign for almost all businesses.

I think oil will come down, but not solely due to demand destruction. There are many cogs in the machine: demand destruction due to rising interest rates and inflation, China buying as much Russian oil as it can (and easing pressure on demand for ROW oil), possible supply increases (since higher prices will result in refineries increasing supply to try and cash in on higher prices).

Correlation between asos and oil is unlikely to be 100% negatively correlated, but I think there is a relationship there, and in my view an easing of energy prices will ease the pressure on consumers.

Oil comes down, cost of living eases which gives more disposable income for consumers to purchase clothing on the likes of asos. Also, will ease inflation on production and delivery costs for asos, their manufacturers and delivery companies.

Kent, I blocked Ammu. Still has to have a parting shot which is sad and I have no time for.

Back to market talk, WTI crude hovering around $100. Whether we break above or below will likely determine the movement in ASOS short term.

Quit with the pettiness Kent and Ammu, nobody else cares for your personal vendettas.

Just because it dropped 80%, it doesn't necessarily mean it's good value.

Not meaning to sound blunt here, but you need to try and find a fair value before you buy a stock. Whether that is doing yourself or using a website, use DCF models to try and understand how the business is currently being valued, and whether you think margins will improve in the future.

I've calculated that asos is currently being valued as if it will earn £30m-£40m in profit each year for the next say, 10 years.

Yes they have guided that they will earn this amount of profit for this year, but this has been mainly due to inflationary costs.

If you think business conditions will improve and asos will survive (I do), then asos will earn a healthy return in the medium term at these levels.

This is the sort of research and thought processes you should have whenever you purchase a stock. Do not just buy because it was down x%, because what will you do when it goes down further? Probably sell.

You don't have to be the best in the market to earn a great return... just don't f*ck up :)

Kent, why did you buy asos? And why did you sell asos?

If you sold simply because the price went down, rather than your thesis changed, I'd argue that's not a good reason to sell.

I bought asos because I believe that the inflation will ease in the medium term, the cost of living will ease, and margins for asos will improve through time. I won't buy or sell on daily movements because I know that if I'm right, the price will follow. If I follow the daily movements in price, I will make an emotional decision that I will end up regretting.

Turning off the news and coming back once a month or so is quite a healthy way to invest in my experience.

Best of luck.