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     Kubang Celebrity Bewarse Username: Kubang Post Number: 39937 Registered: 09-2011 Posted From: 161.141.1.1 Rating: N/A |
The leading stocks are seven tech companies called the FANGs. Total, they’re are worth $4.2 trillion, and are up more than double from $1.9 trillion back in February 2016. But free cash flow was up only 13% in that time period… Free cash flow is the cash generated above capital expenditures to sustain the growth of a company through working capital and fixed investment, and hence the best overall measure of financial health. These stocks have nearly quadrupled in less than five years from $1.17 trillion in June 2013. In that time period they averaged 30% annual growth. That’s three times the 10% average growth in free cash flow… These Magnificent Seven are trading at 31 times the free cash flow, and if you take mighty Apple (Nasdaq: AAPL) out, its 41 times. More recently, the free cash flow is falling in most stocks, not rising. Which is the most absurd? Amazon (Nasdaq: AMZN), of course! It’s trading at 156 times free cash flow. I know that Amazon is known for suppressing margins in the name of long-term world domination, but those numbers are still absurd, and have been for several decades now. Amazon’s primarily an online retailer – not a tech company. And the margins there are unlikely to ever be as high as for a pure software play. ///// I think same goes with TSLA too. overall these things are scary, probably time to trim little bit if you have too much exposure to FANGs. Ignorance is bliss |