Okay iI watched it a second time.. really paid attention this time. I learned that no company comes out a clear winner. So my thought is to rank the data. For me accelerating growth beats NRR because I think there can be a lot of manipulation with NRR numbers from dicey mgmt. Benioff comes to mind..haha. thanks gain...looking forward to INTU.
As always amazing content and great to finally see you in person, even though this is not correlated to the first mentioned. I've recently made one more time the experience by holding and then selling GITLAB after a short period of time, that I simply can't catch enough conviction for a stock if it seems too high valued compared to other stocks and if I don't understand the products / services in detail. Therefore, unfortunately I need to pass most of the SaaS ones.
@@Nanalyze I assume private single stock investors would perform way better and would experience lower stress levels if they would follow those principles but then, it's honestly almost not anymore to invest in a lot of companies. Even large caps like Alphabet or Microsoft, I guess most of private investors have not even slightly a clue how those companies are structured and in which sectors they are active in detail, how they create with what kind of agreements revenue and so on and so on... I think the truth is as a private one, you are investing in kind of a blackbox and at the end, a certain level of trust is simply required.
Great video again! Looks like a nice area where you're shooting this video When it comes to the stocks, i am holding off on them because i think AI will change everything the next few years
I think the hardest part, at least for me, is putting an estimate on the revenue growth runway. Often when I look at fast growing companies, my mind goes "sure, they're growing now, but for how long?". This I feel is especially difficult for small caps, because if they keep growing, eventually the bigger companies in that field will begin to notice.
Yep, good point. That's where we try to estimate future potential using total addressable market (TAM) which is tough to estimate and often exaggerated. We always gravitate towards leaders which don't stay small for very long.
@@Nanalyze I've never bought a SaaS stock that I wasn't at least a heavy user of. It's curious to me that people will buy a stock like Snowflake, Atlassian, etc., and panic when it dips, spamming comments wondering if the company has a future at all. These folks almost never have any idea what the product is or how businesses actually use it (e.g., "off-brand" usage of some popular SaaS workflow tools is common) or any sense of maturity of the software itself.
@@jaykrizzle One reason that people obsess over stock price movements is because of all the tool bags out there on social media whose channels largely revolve around obsessing over stock prices and minute details. Yep, most of these people don't have a clue including the "ontology people" who think that using big words makes them sound knowledgeable.
I bought some snowflake recently, not a large position but its an interesting business and i paid a decent price considering historical astronomical prices. I may expand the position in the future. Missed crowdstrike but i do have some PANW which has done pretty well for me and theyre increasingly stepping on each others toes.
Always good to hold some quality SaaS names! Just set target valuations on stocks you "missed" and odds are they'll disappoint Wall Street and revisit previous valuations.
This channel seems to be an intersection of great information and entertainment.. I laugh. I cry. It’s a roller coaster of emotions. My question to you is, how do you arrive at price targets to buy a stock? Do you stick with SVR mainly? I haven’t heard you mention DCF. Is that because of the sectors you primarily (seem to) cover, like tech? Do you employ any technical analysis in conjunction with your valuations? Anyway… keep up the good work. I like to chuckle while I learn.
Really glad to hear we're informative AND entertaining. People zone out if things are too dry. We use SVR for price targets to buy a stock. We keep things extremely simple, so no DCF stuff. Time value of money is about as far down that road as we're going to go. We always assume the viewer comes to the table with no prerequisite knowledge of finance. As far as technical analysis (some hate it when we say this), it's largely astrology for men. We'll keep it up, thank you for the support!
What are your thoughts on stock based comp (SBC) in relation to SaaS companies. For example atlassian uses 27% of their total revenues on SBC. Doesn't this mask the true valuation when using your simple valuation?
Very good question. Was pondering whether or not to include SBC but ended up skipping. It does not affect simple valuation ratio but it does affect dilution which investors need to pay attention to. We covered the topic in this piece: www.nanalyze.com/2024/06/c3-staggering-interest-generative-ai/
Others mentioned that. I probably could have put another slide towards the end and attempted to try and rank but it was tough. Thank you for the feedback! Joe P.
What is rule of 40 SaaS stocks? The Rule of 40 states that, at scale, the combined value of revenue growth rate and profit margin should exceed 40% for healthy SaaS companies. The Rule of 40 - popularized by Brad Feld - states that an SaaS company's revenue growth rate plus profit margin should be equal to or exceed 40%.
You are absolutely right on sector variations - even by type of business. Hardware will have gross margins that naturally become compressed as the Chinese start coming around ;) For software solutions 40% would seem really low so yes, maybe that's a good "do not exceed" threshold.
I wanted a vid like this and voila you made one. AMAZING.... IF you have the time and interest with a company with accelerating revs and just put up it's first profitable quarter, please nanalyze this company that is in a very niche business. TMDX
That's a great question. I've seen a number of cloud computing ETFs holding all kinds of names but haven't seen an ETF focused exclusively on SaaS names. Also, there's The SaaS Capital Index but haven't done much due diligence on it. Joe P.
this data confused more than clarified.where were you going with this? seems you just stopped in your tracks as you did not draw any clear conclusions..it was like here's the data, have a nice day
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Best channel in the game hands down! You are tremendously appreciated! Be good!
We couldn't ask for better feedback. Thank you! Joe P.
This is institutional level research for the armchair investor.
You folks are doing God's work. 🌟
That is some top-shelf praise and we really appreciate it!
Great video, as usual! Really like the structured approach to look beyond hype and social media promotion
Thank you! Way too much BS out there.
Palantir might be hype stock but Alex Karp is a visionary and loves individual investors so it’s hard to hate it
It's expected that leaders are visionaries. That's why they're leaders.
Satya Nadella, called Palantir a ''leader in their industry” during the July 30 Q4 earnings call.
@@screamotrucker Amazing
@@Nanalyze agreed
Okay iI watched it a second time.. really paid attention this time. I learned that no company comes out a clear winner. So my thought is to rank the data. For me accelerating growth beats NRR because I think there can be a lot of manipulation with NRR numbers from dicey mgmt. Benioff comes to mind..haha. thanks gain...looking forward to INTU.
Agree with your conclusions except for Salesforce only because we don't follow them that closely and wouldn't know.
As always amazing content and great to finally see you in person, even though this is not correlated to the first mentioned.
I've recently made one more time the experience by holding and then selling GITLAB after a short period of time, that I simply can't catch enough conviction for a stock if it seems too high valued compared to other stocks and if I don't understand the products / services in detail. Therefore, unfortunately I need to pass most of the SaaS ones.
Your approach makes sense. Understand a company before you invest in it and make sure it's fairly valued.
@@Nanalyze I assume private single stock investors would perform way better and would experience lower stress levels if they would follow those principles but then, it's honestly almost not anymore to invest in a lot of companies. Even large caps like Alphabet or Microsoft, I guess most of private investors have not even slightly a clue how those companies are structured and in which sectors they are active in detail, how they create with what kind of agreements revenue and so on and so on... I think the truth is as a private one, you are investing in kind of a blackbox and at the end, a certain level of trust is simply required.
Great video again!
Looks like a nice area where you're shooting this video
When it comes to the stocks, i am holding off on them because i think AI will change everything the next few years
Thank you for the feedback. I'm shooting from the Columbia River Gorge. This place is horrible. Nobody should come here. ;) Joe P.
Great stuff Bud! ✌️✌️🥳
Glad you enjoyed man! Joe P.
I think the hardest part, at least for me, is putting an estimate on the revenue growth runway. Often when I look at fast growing companies, my mind goes "sure, they're growing now, but for how long?". This I feel is especially difficult for small caps, because if they keep growing, eventually the bigger companies in that field will begin to notice.
Yep, good point. That's where we try to estimate future potential using total addressable market (TAM) which is tough to estimate and often exaggerated. We always gravitate towards leaders which don't stay small for very long.
You need an actual circle of competence in tech
@@jaykrizzle Lots of circles of competence in tech because if you're not competent, you get sussed out very quickly
@@Nanalyze I've never bought a SaaS stock that I wasn't at least a heavy user of. It's curious to me that people will buy a stock like Snowflake, Atlassian, etc., and panic when it dips, spamming comments wondering if the company has a future at all. These folks almost never have any idea what the product is or how businesses actually use it (e.g., "off-brand" usage of some popular SaaS workflow tools is common) or any sense of maturity of the software itself.
@@jaykrizzle One reason that people obsess over stock price movements is because of all the tool bags out there on social media whose channels largely revolve around obsessing over stock prices and minute details. Yep, most of these people don't have a clue including the "ontology people" who think that using big words makes them sound knowledgeable.
I bought some snowflake recently, not a large position but its an interesting business and i paid a decent price considering historical astronomical prices. I may expand the position in the future. Missed crowdstrike but i do have some PANW which has done pretty well for me and theyre increasingly stepping on each others toes.
Always good to hold some quality SaaS names! Just set target valuations on stocks you "missed" and odds are they'll disappoint Wall Street and revisit previous valuations.
This channel seems to be an intersection of great information and entertainment.. I laugh. I cry. It’s a roller coaster of emotions.
My question to you is, how do you arrive at price targets to buy a stock? Do you stick with SVR mainly? I haven’t heard you mention DCF. Is that because of the sectors you primarily (seem to) cover, like tech? Do you employ any technical analysis in conjunction with your valuations?
Anyway… keep up the good work. I like to chuckle while I learn.
Really glad to hear we're informative AND entertaining. People zone out if things are too dry. We use SVR for price targets to buy a stock. We keep things extremely simple, so no DCF stuff. Time value of money is about as far down that road as we're going to go. We always assume the viewer comes to the table with no prerequisite knowledge of finance. As far as technical analysis (some hate it when we say this), it's largely astrology for men. We'll keep it up, thank you for the support!
😂 love that: technical analysis is astrology for men
What are your thoughts on stock based comp (SBC) in relation to SaaS companies. For example atlassian uses 27% of their total revenues on SBC. Doesn't this mask the true valuation when using your simple valuation?
Very good question. Was pondering whether or not to include SBC but ended up skipping. It does not affect simple valuation ratio but it does affect dilution which investors need to pay attention to. We covered the topic in this piece: www.nanalyze.com/2024/06/c3-staggering-interest-generative-ai/
Very interesting, thanks 🙏
Glad you found this useful!
NEW SUBSCRIBER GREAT CONTENT AND INFO THANK YOU
You're most welcome. Thank you for the support!
Outstanding
That's great feedback, thank you!
I think the video is great but I could not draw actionable conclusions
Others mentioned that. I probably could have put another slide towards the end and attempted to try and rank but it was tough. Thank you for the feedback! Joe P.
What is rule of 40 SaaS stocks? The Rule of 40 states that, at scale, the combined value of revenue growth rate and profit margin should exceed 40% for healthy SaaS companies. The Rule of 40 - popularized by Brad Feld - states that an SaaS company's revenue growth rate plus profit margin should be equal to or exceed 40%.
Yep, that's a metric we could have evaluated but ran out of time. We did a video on the topic here: ua-cam.com/video/oMEgJGdQeBY/v-deo.html
What is your threshold for gross margin. I know it depends on the sector but in general? 40%?
You are absolutely right on sector variations - even by type of business. Hardware will have gross margins that naturally become compressed as the Chinese start coming around ;) For software solutions 40% would seem really low so yes, maybe that's a good "do not exceed" threshold.
Maybe make a video about Nike after the greatest drop in one day?
Premium subscribers asked for this. It's already completed and scheduled for Friday. ;)
do you guys plan to launch a public ETF ?
We'd like to launch one on our DGI strategy, Quantigence, and are doing some preliminary investigations on that.
@@Nanalyze nice look forward to it , i will invest i know :)
@@sr-wn3vn Really appreciate the interest! We get asked this a lot so we're looking into it. Tough though unless you have a decent amount of AUM.
I wanted a vid like this and voila you made one. AMAZING.... IF you have the time and interest with a company with accelerating revs and just put up it's first profitable quarter, please nanalyze this company that is in a very niche business. TMDX
Really glad we're producing content in anticipation of demand! We covered TMDX here: www.nanalyze.com/2024/04/growth-left-transmedics-tmdx/
@@Nanalyze THANK YOU SO MUCH.. This channel is ridiculously great
Is there an ETF that focuses on these and other SaaS companies with market cap weighting?
That's a great question. I've seen a number of cloud computing ETFs holding all kinds of names but haven't seen an ETF focused exclusively on SaaS names. Also, there's The SaaS Capital Index but haven't done much due diligence on it. Joe P.
So who was the winner again?
Everyone gets a medal. Just kidding. I started out trying to do a points-based tally along the various dimensions and it became too convoluted. Joe P.
I like Crm for the value for the growth Pltr seems good company but way overpriced
Lots of interesting names in this lisr
this data confused more than clarified.where were you going with this? seems you just stopped in your tracks as you did not draw any clear conclusions..it was like here's the data, have a nice day
That's certainly one conclusion ;)