cucurupiku personal page - To The Moon

cucurupiku

cucurupiku

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2022-03-25

Love this article and insight. Will check on them❤️❤️

Got $3,000? 3 Tech Stocks to Buy and Hold for the Long Term

2022-04-13

Time to collect good undervalued stocks

2022-04-07

Thank you

Sleep Number: The Stock Will Wake Up Soon

2022-03-28

Been watching on Adobe too. It has great business performance so I agree with you. This is a good company that will continue to grow.

Buy Adobe Before It Takes Off Higher

Go to Tiger App to see more news

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T","content":"<html><body><p><figure><picture><img height=\"1024px\" src=\"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1141974205/image_1141974205.jpg?io=getty-c-w750\" srcset=\"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1141974205/image_1141974205.jpg?io=getty-c-w1536 1536w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1141974205/image_1141974205.jpg?io=getty-c-w1280 1280w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1141974205/image_1141974205.jpg?io=getty-c-w1080 1080w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1141974205/image_1141974205.jpg?io=getty-c-w750 750w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1141974205/image_1141974205.jpg?io=getty-c-w640 640w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1141974205/image_1141974205.jpg?io=getty-c-w480 480w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1141974205/image_1141974205.jpg?io=getty-c-w320 320w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1141974205/image_1141974205.jpg?io=getty-c-w240 240w\" width=\"1536px\"/></picture><figcaption><p>deteetarkan/iStock via Getty Images</p></figcaption></figure></p> <p>Sleep Number (<span>NASDAQ:SNBR</span>) is a well-managed, quality company. The recent price correction offers investors a 200-300% potential return in a two/three years' time frame with limited downside risks.</p> <h2><strong>A Defensive Business</strong></h2> <p>Mattress making has a long<span> history. A few companies had been in existence for hundreds of years - e.g., both Simmons and Sealy were founded in the late 1800s and continue to make and market their mattresses under the same brand names today.</span></p> <p>The US mattress market is a $30-$40bn market in retail, growing at 5-6% annually. Sleep Number is the third-largest company with an 8% market share. The top players are Tempur Sealy International, Inc. (TPX) and Serta-Simmons - each has a 20-30% market share.</p> <p><figure><picture><span><img height=\"431\" hspace=\"6\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/4/5/7524801-16491871896743958.jpg\" vspace=\"6\" width=\"640\"/></span></picture><figcaption><p>Market Shares (Purple Investor Presentation)</p></figcaption></figure></p> <p>Innovation in mattresses is slow. The first-generation mattress appeared in the late 1800s, made with innersprings, which later evolved into pocket coils. Coil mattresses are still widely in use today, estimated at 40% as of 2020. After almost 200 years, in the early 1990s, Tempur-Pedic introduced the memory form mattress, a technology originally created for NASA in the 70s. In today's market, these two materials are still the majority of mattresses are made of. This means that the industry is quite stable and unlikely to be disrupted by some revolutionary technologies, like in many other industries.</p> <p><figure><picture><span><img height=\"404\" hspace=\"6\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/4/5/7524801-1649186929010952.jpg\" vspace=\"6\" width=\"640\"/></span></picture><figcaption><p>Mattress Type (Purple Investor Presentation)</p></figcaption></figure></p> <p>The memory foam material spurred further innovation. In 2010, Casper Sleep (privatized in 2021) introduced the bed-in-a-box. The invention greatly reduced warehousing and delivery costs and made possible a low-cost, e-commerce business model. A bed-in-a-box company can run without much asset investments. It outsources manufacturing to overseas or domestic mattress plants and focuses on online marketing. It's estimated that close to 200 such e-commerce mattress companies were in operation at <a href=\"https://laohu8.com/S/AONE.U\">one</a> time in the low-end segment. The intensified competition has greatly pushed up operating expenses, particularly the online ad costs. Making money becomes more and more difficult. Casper, the pioneer of this business model and the largest in scale, was acquired last year by a private equity firm. Until the time it was acquired, it has not made any profit.</p> <p>The high-end mattress segment accounts for 20-30% of unit sales in the US, but over 50% in value. This segment has a much better business environment as barriers to entry are much higher. One of the key barriers is simply the fact that consumers are unlikely to spend thousands of dollars on a mattress without a chance to try it out or talk to the salesperson about its premium features. Most e-commerce companies can't afford retail stores. Their low price tags also prevent them from selling through third-party retailers (e.g., furniture stores or specialty mattress stores). Over the past five years, we are seeing the premium segment grow faster than the low-ends. We expect this trend to continue.</p> <p><figure><picture><span><img height=\"417\" hspace=\"6\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/4/5/7524801-16491872762612555.jpg\" vspace=\"6\" width=\"640\"/></span></picture><figcaption><p>Mattress Market Share (Purple Investor Presentation)</p></figcaption></figure></p> <h2><strong>A Different Way to Do Business</strong></h2> <p>As physical stores are needed to sell premium products, a manufacturer, in general, has two go-to-market strategies: 1) wholesale to retailers, which includes department stores, furniture stores, and mattress specialty stores like Mattress Firm (the wholesale model), or 2) sell directly to consumers through company-owned stores (the DTC model). The wholesale model can scale up quickly, as long as manufacturing capacity can catch up. But due to a third party in between, it won't be able to establish a direct connection with its customers.</p> <p>The DTC and wholesale models also have different margin profiles. In the wholesale business, the manufacturer makes about 30-40% profit and gives 30-40% to the retailers. They, however, can save on marketing expenses, as that would be a joint effort between the manufacturer and retailers. The retailers can generally spread marketing expenses across a much wider range of products, and therefore are more efficient in terms of the use of marketing dollars. While DTC model gives the manufacturer a higher gross margin (~60%), but it also needs to spend significant marketing dollars on customer acquisitions. This is a prohibitive barrier for companies at smaller scales. Therefore, most high-end mattress firms would not go this route until it has achieved a larger scale.</p> <p>SNBR is unique in that it's a pure play of DTC model. Almost all revenues are generated through its retail network of 648 stores as of today. It's the largest in terms of manufacturer-owned retail stores in the US. Digital sales only increased recently due to COVID, accounting for about 13%. SNBR greatly benefits from having its own retailer store network, in my opinion.</p> <p>First, there is the direct relationship with customers: The DTC model enables the company to establish a direct relationship with its customers. Its Smart Sleeper community has 2.1 million members today and its award-winning InnerCircle Rewards program drives acquisition of new customers through referral and greater retention with repeat purchases.</p> <p>Second, there is better cash management: Being close to the customers has enabled the company to better manage its working capital. Sleep Number is the only mattress firm that manufactures after an order is received (the lead time is about 1-2 weeks). This greatly reduced its working capital tied in inventory.</p> <span><table> <colgroup> <col/> <col span=\"2\"/> <col/> </colgroup> <tr> <td>($mn)</td> <td><strong>SBNR</strong></td> <td><strong>TPX</strong></td> <td><strong>PRPL</strong></td> </tr> <tr> <td>Revenue</td> <td>$2,184.9</td> <td>$4,930.8</td> <td>$726.2</td> </tr> <tr> <td>Account Receivable</td> <td>$25.7</td> <td>$419.5</td> <td>$25.4</td> </tr> <tr> <td>Inventory</td> <td>$105.6</td> <td>$463.9</td> <td>$98.7</td> </tr> <tr> <td>Accounts Payable</td> <td>162.5</td> <td>432</td> <td>79.8</td> </tr> <tr> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr> <td>AR Days</td> <td>4.3</td> <td>31.1</td> <td>12.8</td> </tr> <tr> <td>Inventory Days</td> <td>17.6</td> <td>34.3</td> <td>49.6</td> </tr> <tr> <td>AP Days</td> <td>27.1</td> <td>32.0</td> <td>40.1</td> </tr> <tr> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr> <td>Cash Conversion Days</td> <td>-5.2</td> <td>33.4</td> <td>22.3</td> </tr> </table></span> <p>Third, it's better positioned in the value chain: Operating a large retail network gives the company great negotiation power with its upstream suppliers. As a result, the company can pay raw materials on terms. Other the other end, SNBR gets paid by its customers right away. This allows the company to run on negative working capital, meaning that as the company expands, it not only does not need to invest in working capital, it can actually generate more cash out of the business.</p> <p>Fourth is the long-term margin leverage from SG&amp;A expenses: As the company's store network expands, it will benefit from leverage on SG&amp;A expense, the largest portion of its expenses, ~50% of sales. This is because the general administration expenses and corporate marketing expenses could grow slower than the revenue growth. Over the past four years, SG&amp;A expense declined from 55.7% to 51.5%, about a 1% improvement per year.</p> <h2><strong>Highly Efficient Operation</strong></h2> <p>SNBR not only operates just-in-time manufacturing and inventory, its retail stores are also highly efficient. On a sales/square foot basis, SNBR is ranked the fourth top retailer in the US - right after Apple (AAPL), Tiffany, and Lululemon (LULU).</p> <span><table> <tr> <td> </td> <td><p>Average sales per store (000's)</p></td> <td><p>Average square footage per store open</p></td> <td><p>Total retail square footage</p></td> </tr> <tr> <td><p>2017</p></td> <td><p>$2,618</p></td> <td><p>2,647</p></td> <td><p>$1,489</p></td> </tr> <tr> <td><p>2018</p></td> <td><p>$2,707</p></td> <td><p>2,725</p></td> <td><p>$1,598</p></td> </tr> <tr> <td><p>2019</p></td> <td><p>$2,877</p></td> <td><p>2,802</p></td> <td><p>$1,749</p></td> </tr> <tr> <td><p>2020</p></td> <td><p>$3,052</p></td> <td><p>2,926</p></td> <td><p>$1,762</p></td> </tr> <tr> <td><p>2021</p></td> <td><p>$3,600</p></td> <td><p>3,006</p></td> <td><p>$1,948</p></td> </tr> </table></span> <p>Return on equity or invested capital (ROE or ROIC) is probably the better measures of a company's operational efficiency. On an ROIC basis, the company has improved continuously, at 27.6% in 2021. ROE is not applicable due to the company's negative equity. The negative equity, however, is not a bad thing in the SNBR case. It simply resulted from too many shares being bought back by the company.</p> <span><table> <colgroup><col span=\"6\"/></colgroup> <tr> <td> </td> <td>2017</td> <td>2018</td> <td>2019</td> <td>2020</td> <td>2021</td> </tr> <tr> <td>ROIC</td> <td>14.3%</td> <td>16.0%</td> <td>17.8%</td> <td>25.0%</td> <td>27.6%</td> </tr> </table></span> <h2><strong>Shareholder Orientated Management</strong></h2> <p>Some investors have commented that the company's low cash balance, high bank loan, and negative equity look scary. But if you understand the reasons behind them, those are actually signs of a rarely found, great-run company.</p> <p>As explained earlier, the company's negative working capital indicates that it does not require much cash in daily operations. And dealing directly with mass retail customers gives the company a better feel for market dynamics. SNBR can generally project its cash requirement ahead of the time. Keeping a minimum cash on the balance sheet can maximize the utilization of every dollar and generate the maximum value for shareholders. To be safe, the company does have a revolving credit line of $825mn up to $1.2bn in case of emergency. For the last two years, interest rates on its bank loan are merely 1.5-1.6%. Using such low-cost financial leverage further increases shareholder value.</p> <p>Each year, the company deployed the maximum amount of cash for share repurchases. As shown in the following table, SNBR spent more than twice its earnings and more than 100% of its cash from operations in share buybacks over the past five years, resulting a negative book value starting in 2018.</p> <span><table> <tr> <td><p>($mn)</p></td> <td><p><strong>2017</strong></p></td> <td><p><strong>2018</strong></p></td> <td><p><strong>2019</strong></p></td> <td><p><strong>2020</strong></p></td> <td><p><strong>2021</strong></p></td> <td><p><strong>Total</strong></p></td> </tr> <tr> <td><p>Net Income</p></td> <td><p>65.1</p></td> <td><p>69.5</p></td> <td><p>81.8</p></td> <td><p>139.2</p></td> <td><p>153.7</p></td> <td><p><strong>509.3</strong></p></td> </tr> <tr> <td><p>Cash from Operations</p></td> <td><p>172.6</p></td> <td><p>131.5</p></td> <td><p>189.2</p></td> <td><p>279.7</p></td> <td><p>300</p></td> <td><p><strong>1073</strong></p></td> </tr> <tr> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr> <td><p>Debt Issued</p></td> <td><p>28.1</p></td> <td><p>182.3</p></td> <td><p>26.4</p></td> <td><p>0</p></td> <td><p>145.5</p></td> <td><p><strong>382.3</strong></p></td> </tr> <tr> <td><p>Share Buyback</p></td> <td><p>155.2</p></td> <td><p>272.4</p></td> <td><p>165.1</p></td> <td><p>235.6</p></td> <td><p>382.4</p></td> <td><p><strong>1210.7</strong></p></td> </tr> <tr> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr> <td><p>Buyback/Net Income</p></td> <td><p>238%</p></td> <td><p>392%</p></td> <td><p>202%</p></td> <td><p>169%</p></td> <td><p>249%</p></td> <td><p><strong>238%</strong></p></td> </tr> <tr> <td><p>Buyback/CFO</p></td> <td><p>90%</p></td> <td><p>207%</p></td> <td><p>87%</p></td> <td><p>84%</p></td> <td><p>127%</p></td> <td><p><strong>113%</strong></p></td> </tr> </table></span> <h2><strong>Recent Share Decline</strong></h2> <p>Like many home goods businesses, SNBR benefited from COVID as sales grew 17.7% to $2,184.9mn in 2021 from 2020, and grew 28.6% from 2019. Net income increased 10.5% to $153.7mn from 2020, and grew 87.9% from 2019. However, the share price peaked in March 2021 and has declined more than 67% over the past year to ~$50 today, the lowest it's been in 18 months. Such a deep correction is due to the following reasons:</p> <ol> <li>As COVID eases, all stocks that had benefited from it are giving back some of the gains.</li> <li>The global chip shortage has impacted the company's 4Q21 results, with the delivery of $125mn (25% of sales) postponed into 2022. Due to this delay, margin was greatly impacted and declined to 56.86% from 61-62% normally. It looks as if the impact could last at least for the 1H22. Industry news indicates such a chip shortage could run through 2022 and won't ease until 2023-24, although several major chip manufacturers announced significant capacity expansions after this.</li> <li>Global inflation since 2021 has pushed up costs. As discussed above, as a DTC business SNBR can pass those on easier than its peers. In March, some analysts found that they started giving discounts on recent price increases, indicating weaker-than-expected demand. This will likely lead to a slide in margins. Management has guided that gross margins would face 1% pressure in 2022 from last year.</li> </ol> <h2><strong>Extremely Attractive at the Current Price</strong></h2> <p>The mattress business is defensive. The company grew sales in 18 of the last 20 years and only declined 9% during the financial crisis in 2008 and 2009. With the failing of low-end players, this premium mattress company is expected to perform better than the industry's 5-6% over the next 3-5 years. Despite a temporary slowdown, SNBR should continue to grow in the near and mid-long term. The company has guided low double-digit growth for 2022.</p> <p>SNBR is well managed, with a differentiated DTC business model. The company is able to leverage financially with low risk (by using suppliers and banks' money) to improve investment returns (27% ROIC). It also committed to significant and impactful share buybacks, the most efficient way to reward shareholders.</p> <p>Over the last five years, SNBR's revenue increased a modest 11% per year. However, its EPS grew 41% CAGR (implying its stock could increase that much if there's no change in the P/E ratio). How is that possible? Besides some margin expansion, this was achieved mainly through the company's massive share repurchase program. And the good news is that with the share count and share price both at very low levels now, the impact on EPS growth is even greater than before.</p> <p>Mathematically, EPS growth is the change in net income multiplied by the change in share counts, as depicted in the following formula:</p> <p>EPS growth = (Net Income<sub>1</sub>/Share Count<sub>1</sub>)/ (Net Income<sub>0</sub>/Share Count<sub>0</sub>)-1</p> <p>= (Net Income<sub>1</sub>/Net Income<sub>0</sub>)*(Share Count<sub>0</sub>)/(Share Count<sub>1</sub>)-1</p> <p>Because both share count and price are very low, the percentage change from share count will be much more significant than it had been. Specifically, outstanding shares today were 22mn, with the 2021 average count at about 24mn. The company has a $400mn unused quota for share repurchase; if it buys at the current level, $400mn can reduce the share count by 8mn. The growth from share count change is 50% (24/16 - 1). In two years, 16mn can be removed from the market, and growth from this alone is 200% (24/8 - 1).</p> <p>Obviously, this hypothetical exercise won't be realized since the share price won't stay at $50 for two years. But it shows that the longer it stays at low levels, the stronger it will be for the company's fundamentals. I'm sure the company is very busy buying shares from the market right now.</p> <p>More realistically, in two years' time, assuming the company spent $800mn for buybacks (operating cash flow of $300-400mn a year plus some borrowing) and purchased share at $80/sh (implying a share price range from $50 to $120/sh), that would cancel 10mn shares from the current 24mn, giving EPS a boost of 70% (24/14-1) growth. In two years' time, supply chain issue should have been resolved and if no other disruptive events are happening, the company should have grown the top line by at least 20%. The bottom line in normal business conditions should have grown by 40-50% due to margin improvement. Along with the 70% growth from share buybacks, EPS growth should be at least doubled from the 2021 level.</p> <p>But that's not all.</p> <p><figure><img height=\"366\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/4/4/saupload_37640fb1d0d4838089b0619195c37754.png\" width=\"635\"/><figcaption>Data by YCharts</figcaption></figure></p> <p>As shown above, the current P/E ratio at 8.4x is almost its historical low, except for a brief period in March 2020. The shares had been generally trading at 15-20x in normal times and close to 30x in optimistic times. Therefore, it's reasonable to expect that if in two years the business condition returns to normal, its valuation could also recover to 15-20x. That's another double from the current level.</p> <h2><strong>Conclusion</strong></h2> <p>Sleep Number, a high-quality company, has offered investors a great opportunity thanks to industry-wide, but temporary, distress. In two years' time, when such distress is over and business conditions return to normal, the shares could potentially increase to $200, quadrupling from the current ~$50 level. Even if another unforeseeable risk happened in two years, SNBR's defensive business, close-to-customers business model, strong cash generation, excellent management team, and, more importantly, deep valuation provide investors with an ample margin of safety. I'm a strong buyer at this level.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Sleep Number: The Stock Will Wake Up Soon</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSleep Number: The Stock Will Wake Up Soon\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-04-07 06:21 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4500130-significant-growth-ahead-for-sleep-number><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>deteetarkan/iStock via Getty Images Sleep Number (NASDAQ:SNBR) is a well-managed, quality company. The recent price correction offers investors a 200-300% potential return in a two/three years' time ...</p>\n\n<a href=\"https://seekingalpha.com/article/4500130-significant-growth-ahead-for-sleep-number\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BK4576":"AR","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4575":"芯片概念","BK4566":"资本集团","BK4501":"段永平概念","BK4559":"巴菲特持仓","BK4527":"明星科技股","BK4579":"人工智能","BK4550":"红杉资本持仓","TPX":"泰浦陛迪国际公司","BK4095":"家庭装饰品","BK4574":"无人驾驶","BK4573":"虚拟现实","BK4505":"高瓴资本持仓","BK4581":"高盛持仓","BK4512":"苹果概念","BK4504":"桥水持仓","BK4507":"流媒体概念","BK4202":"服装、服饰与奢侈品","SNBR":"Sleep Number Corporation","BK4170":"电脑硬件、储存设备及电脑周边","LULU":"lululemon athletica","BK4515":"5G概念","BK4554":"元宇宙及AR概念","BK4532":"文艺复兴科技持仓","AAPL":"苹果","BK4178":"家庭装饰零售","BK4553":"喜马拉雅资本持仓","BK4571":"数字音乐概念","BK4534":"瑞士信贷持仓"},"source_url":"https://seekingalpha.com/article/4500130-significant-growth-ahead-for-sleep-number","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2225564226","content_text":"deteetarkan/iStock via Getty Images Sleep Number (NASDAQ:SNBR) is a well-managed, quality company. The recent price correction offers investors a 200-300% potential return in a two/three years' time frame with limited downside risks. A Defensive Business Mattress making has a long history. A few companies had been in existence for hundreds of years - e.g., both Simmons and Sealy were founded in the late 1800s and continue to make and market their mattresses under the same brand names today. The US mattress market is a $30-$40bn market in retail, growing at 5-6% annually. Sleep Number is the third-largest company with an 8% market share. The top players are Tempur Sealy International, Inc. (TPX) and Serta-Simmons - each has a 20-30% market share. Market Shares (Purple Investor Presentation) Innovation in mattresses is slow. The first-generation mattress appeared in the late 1800s, made with innersprings, which later evolved into pocket coils. Coil mattresses are still widely in use today, estimated at 40% as of 2020. After almost 200 years, in the early 1990s, Tempur-Pedic introduced the memory form mattress, a technology originally created for NASA in the 70s. In today's market, these two materials are still the majority of mattresses are made of. This means that the industry is quite stable and unlikely to be disrupted by some revolutionary technologies, like in many other industries. Mattress Type (Purple Investor Presentation) The memory foam material spurred further innovation. In 2010, Casper Sleep (privatized in 2021) introduced the bed-in-a-box. The invention greatly reduced warehousing and delivery costs and made possible a low-cost, e-commerce business model. A bed-in-a-box company can run without much asset investments. It outsources manufacturing to overseas or domestic mattress plants and focuses on online marketing. It's estimated that close to 200 such e-commerce mattress companies were in operation at one time in the low-end segment. The intensified competition has greatly pushed up operating expenses, particularly the online ad costs. Making money becomes more and more difficult. Casper, the pioneer of this business model and the largest in scale, was acquired last year by a private equity firm. Until the time it was acquired, it has not made any profit. The high-end mattress segment accounts for 20-30% of unit sales in the US, but over 50% in value. This segment has a much better business environment as barriers to entry are much higher. One of the key barriers is simply the fact that consumers are unlikely to spend thousands of dollars on a mattress without a chance to try it out or talk to the salesperson about its premium features. Most e-commerce companies can't afford retail stores. Their low price tags also prevent them from selling through third-party retailers (e.g., furniture stores or specialty mattress stores). Over the past five years, we are seeing the premium segment grow faster than the low-ends. We expect this trend to continue. Mattress Market Share (Purple Investor Presentation) A Different Way to Do Business As physical stores are needed to sell premium products, a manufacturer, in general, has two go-to-market strategies: 1) wholesale to retailers, which includes department stores, furniture stores, and mattress specialty stores like Mattress Firm (the wholesale model), or 2) sell directly to consumers through company-owned stores (the DTC model). The wholesale model can scale up quickly, as long as manufacturing capacity can catch up. But due to a third party in between, it won't be able to establish a direct connection with its customers. The DTC and wholesale models also have different margin profiles. In the wholesale business, the manufacturer makes about 30-40% profit and gives 30-40% to the retailers. They, however, can save on marketing expenses, as that would be a joint effort between the manufacturer and retailers. The retailers can generally spread marketing expenses across a much wider range of products, and therefore are more efficient in terms of the use of marketing dollars. While DTC model gives the manufacturer a higher gross margin (~60%), but it also needs to spend significant marketing dollars on customer acquisitions. This is a prohibitive barrier for companies at smaller scales. Therefore, most high-end mattress firms would not go this route until it has achieved a larger scale. SNBR is unique in that it's a pure play of DTC model. Almost all revenues are generated through its retail network of 648 stores as of today. It's the largest in terms of manufacturer-owned retail stores in the US. Digital sales only increased recently due to COVID, accounting for about 13%. SNBR greatly benefits from having its own retailer store network, in my opinion. First, there is the direct relationship with customers: The DTC model enables the company to establish a direct relationship with its customers. Its Smart Sleeper community has 2.1 million members today and its award-winning InnerCircle Rewards program drives acquisition of new customers through referral and greater retention with repeat purchases. Second, there is better cash management: Being close to the customers has enabled the company to better manage its working capital. Sleep Number is the only mattress firm that manufactures after an order is received (the lead time is about 1-2 weeks). This greatly reduced its working capital tied in inventory.        ($mn) SBNR TPX PRPL   Revenue $2,184.9 $4,930.8 $726.2   Account Receivable $25.7 $419.5 $25.4   Inventory $105.6 $463.9 $98.7   Accounts Payable 162.5 432 79.8             AR Days 4.3 31.1 12.8   Inventory Days 17.6 34.3 49.6   AP Days 27.1 32.0 40.1             Cash Conversion Days -5.2 33.4 22.3   Third, it's better positioned in the value chain: Operating a large retail network gives the company great negotiation power with its upstream suppliers. As a result, the company can pay raw materials on terms. Other the other end, SNBR gets paid by its customers right away. This allows the company to run on negative working capital, meaning that as the company expands, it not only does not need to invest in working capital, it can actually generate more cash out of the business. Fourth is the long-term margin leverage from SG&A expenses: As the company's store network expands, it will benefit from leverage on SG&A expense, the largest portion of its expenses, ~50% of sales. This is because the general administration expenses and corporate marketing expenses could grow slower than the revenue growth. Over the past four years, SG&A expense declined from 55.7% to 51.5%, about a 1% improvement per year. Highly Efficient Operation SNBR not only operates just-in-time manufacturing and inventory, its retail stores are also highly efficient. On a sales/square foot basis, SNBR is ranked the fourth top retailer in the US - right after Apple (AAPL), Tiffany, and Lululemon (LULU).     Average sales per store (000's) Average square footage per store open Total retail square footage   2017 $2,618 2,647 $1,489   2018 $2,707 2,725 $1,598   2019 $2,877 2,802 $1,749   2020 $3,052 2,926 $1,762   2021 $3,600 3,006 $1,948   Return on equity or invested capital (ROE or ROIC) is probably the better measures of a company's operational efficiency. On an ROIC basis, the company has improved continuously, at 27.6% in 2021. ROE is not applicable due to the company's negative equity. The negative equity, however, is not a bad thing in the SNBR case. It simply resulted from too many shares being bought back by the company.      2017 2018 2019 2020 2021   ROIC 14.3% 16.0% 17.8% 25.0% 27.6%   Shareholder Orientated Management Some investors have commented that the company's low cash balance, high bank loan, and negative equity look scary. But if you understand the reasons behind them, those are actually signs of a rarely found, great-run company. As explained earlier, the company's negative working capital indicates that it does not require much cash in daily operations. And dealing directly with mass retail customers gives the company a better feel for market dynamics. SNBR can generally project its cash requirement ahead of the time. Keeping a minimum cash on the balance sheet can maximize the utilization of every dollar and generate the maximum value for shareholders. To be safe, the company does have a revolving credit line of $825mn up to $1.2bn in case of emergency. For the last two years, interest rates on its bank loan are merely 1.5-1.6%. Using such low-cost financial leverage further increases shareholder value. Each year, the company deployed the maximum amount of cash for share repurchases. As shown in the following table, SNBR spent more than twice its earnings and more than 100% of its cash from operations in share buybacks over the past five years, resulting a negative book value starting in 2018.   ($mn) 2017 2018 2019 2020 2021 Total   Net Income 65.1 69.5 81.8 139.2 153.7 509.3   Cash from Operations 172.6 131.5 189.2 279.7 300 1073                   Debt Issued 28.1 182.3 26.4 0 145.5 382.3   Share Buyback 155.2 272.4 165.1 235.6 382.4 1210.7                   Buyback/Net Income 238% 392% 202% 169% 249% 238%   Buyback/CFO 90% 207% 87% 84% 127% 113%   Recent Share Decline Like many home goods businesses, SNBR benefited from COVID as sales grew 17.7% to $2,184.9mn in 2021 from 2020, and grew 28.6% from 2019. Net income increased 10.5% to $153.7mn from 2020, and grew 87.9% from 2019. However, the share price peaked in March 2021 and has declined more than 67% over the past year to ~$50 today, the lowest it's been in 18 months. Such a deep correction is due to the following reasons:  As COVID eases, all stocks that had benefited from it are giving back some of the gains. The global chip shortage has impacted the company's 4Q21 results, with the delivery of $125mn (25% of sales) postponed into 2022. Due to this delay, margin was greatly impacted and declined to 56.86% from 61-62% normally. It looks as if the impact could last at least for the 1H22. Industry news indicates such a chip shortage could run through 2022 and won't ease until 2023-24, although several major chip manufacturers announced significant capacity expansions after this. Global inflation since 2021 has pushed up costs. As discussed above, as a DTC business SNBR can pass those on easier than its peers. In March, some analysts found that they started giving discounts on recent price increases, indicating weaker-than-expected demand. This will likely lead to a slide in margins. Management has guided that gross margins would face 1% pressure in 2022 from last year.  Extremely Attractive at the Current Price The mattress business is defensive. The company grew sales in 18 of the last 20 years and only declined 9% during the financial crisis in 2008 and 2009. With the failing of low-end players, this premium mattress company is expected to perform better than the industry's 5-6% over the next 3-5 years. Despite a temporary slowdown, SNBR should continue to grow in the near and mid-long term. The company has guided low double-digit growth for 2022. SNBR is well managed, with a differentiated DTC business model. The company is able to leverage financially with low risk (by using suppliers and banks' money) to improve investment returns (27% ROIC). It also committed to significant and impactful share buybacks, the most efficient way to reward shareholders. Over the last five years, SNBR's revenue increased a modest 11% per year. However, its EPS grew 41% CAGR (implying its stock could increase that much if there's no change in the P/E ratio). How is that possible? Besides some margin expansion, this was achieved mainly through the company's massive share repurchase program. And the good news is that with the share count and share price both at very low levels now, the impact on EPS growth is even greater than before. Mathematically, EPS growth is the change in net income multiplied by the change in share counts, as depicted in the following formula: EPS growth = (Net Income1/Share Count1)/ (Net Income0/Share Count0)-1 = (Net Income1/Net Income0)*(Share Count0)/(Share Count1)-1 Because both share count and price are very low, the percentage change from share count will be much more significant than it had been. Specifically, outstanding shares today were 22mn, with the 2021 average count at about 24mn. The company has a $400mn unused quota for share repurchase; if it buys at the current level, $400mn can reduce the share count by 8mn. The growth from share count change is 50% (24/16 - 1). In two years, 16mn can be removed from the market, and growth from this alone is 200% (24/8 - 1). Obviously, this hypothetical exercise won't be realized since the share price won't stay at $50 for two years. But it shows that the longer it stays at low levels, the stronger it will be for the company's fundamentals. I'm sure the company is very busy buying shares from the market right now. More realistically, in two years' time, assuming the company spent $800mn for buybacks (operating cash flow of $300-400mn a year plus some borrowing) and purchased share at $80/sh (implying a share price range from $50 to $120/sh), that would cancel 10mn shares from the current 24mn, giving EPS a boost of 70% (24/14-1) growth. In two years' time, supply chain issue should have been resolved and if no other disruptive events are happening, the company should have grown the top line by at least 20%. The bottom line in normal business conditions should have grown by 40-50% due to margin improvement. Along with the 70% growth from share buybacks, EPS growth should be at least doubled from the 2021 level. But that's not all. Data by YCharts As shown above, the current P/E ratio at 8.4x is almost its historical low, except for a brief period in March 2020. The shares had been generally trading at 15-20x in normal times and close to 30x in optimistic times. Therefore, it's reasonable to expect that if in two years the business condition returns to normal, its valuation could also recover to 15-20x. That's another double from the current level. Conclusion Sleep Number, a high-quality company, has offered investors a great opportunity thanks to industry-wide, but temporary, distress. In two years' time, when such distress is over and business conditions return to normal, the shares could potentially increase to $200, quadrupling from the current ~$50 level. Even if another unforeseeable risk happened in two years, SNBR's defensive business, close-to-customers business model, strong cash generation, excellent management team, and, more importantly, deep valuation provide investors with an ample margin of safety. I'm a strong buyer at this level.","news_type":1},"isVote":1,"tweetType":1,"viewCount":236,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9010544096,"gmtCreate":1648434573847,"gmtModify":1676534337540,"author":{"id":"4109140939305660","authorId":"4109140939305660","name":"cucurupiku","avatar":"https://community-static.tradeup.com/news/8fdb8be10cf44557885020e8cecbb37d","crmLevel":2,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4109140939305660","authorIdStr":"4109140939305660"},"themes":[],"htmlText":"Been watching on Adobe too. It has great business performance so I agree with you. This is a good company that will continue to&nbsp;grow.&nbsp;","listText":"Been watching on Adobe too. It has great business performance so I agree with you. This is a good company that will continue to&nbsp;grow.&nbsp;","text":"Been watching on Adobe too. It has great business performance so I agree with you. This is a good company that will continue to grow.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9010544096","repostId":"2222597868","repostType":2,"isVote":1,"tweetType":1,"viewCount":291,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9037520894,"gmtCreate":1648143450482,"gmtModify":1676534309057,"author":{"id":"4109140939305660","authorId":"4109140939305660","name":"cucurupiku","avatar":"https://community-static.tradeup.com/news/8fdb8be10cf44557885020e8cecbb37d","crmLevel":2,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4109140939305660","authorIdStr":"4109140939305660"},"themes":[],"htmlText":"Love this article and insight. Will check on them❤️❤️","listText":"Love this article and insight. Will check on them❤️❤️","text":"Love this article and insight. Will check on them❤️❤️","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9037520894","repostId":"2221020070","repostType":2,"repost":{"id":"2221020070","kind":"highlight","pubTimestamp":1648119600,"share":"https://ttm.financial/m/news/2221020070?lang=&edition=fundamental","pubTime":"2022-03-24 19:00","market":"us","language":"en","title":"Got $3,000? 3 Tech Stocks to Buy and Hold for the Long Term","url":"https://stock-news.laohu8.com/highlight/detail?id=2221020070","media":"Motley Fool","summary":"While their stocks are down significantly from their highs, each business is still growing above market pace.","content":"<html><head></head><body><p>Investors with some cash sitting on the sidelines should be looking to deploy it and take advantage of some fantastic buying opportunities out there at the moment. While it&#39;s wise to always keep some portion of an investment portfolio in cash, remember that you are doing so with the intent to deploy it at a moment&#39;s notice when a good deal presents itself.</p><p>That ready-to-go cash can now be put to use on three stocks with great long-term potential that are currently selling at discounted prices: <b>CrowdStrike</b> <b>Holdings</b> ( CRWD 1.11% ), <b>Autodesk</b> ( ADSK -4.30% ), and <b>Twilio</b> ( TWLO -1.19% ). All have been sold off significantly, yet each produced great 2021 results and each is looking forward to a similarly successful 2022.</p><h2>1. CrowdStrike</h2><p>Cybersecurity is CrowdStrike&#39;s niche, and it does it better than nearly anyone else. Through its security cloud product, CrowdStrike protects endpoints from breaches, protecting networks no matter where employees are accessing it from. With an uptick in cyberattack risk due to the Russia-Ukraine war, cybersecurity has never been more important.</p><p>Customers have been quick to adopt CrowdStrike&#39;s solution. At the end of the company&#39;s 2017 fiscal year (Jan. 31, 2017), it had only 450 customers. Fast-forward five years and its customer base is up to 16,325 at the end of fiscal year 2022, with a 65% jump just from fiscal year 2021. Customers are also expanding their use of CrowdStrike&#39;s products. The company offers more than 20 different modules that perform different tasks like firewall management and malware analysis. The business had 47% of customers using four or more modules in Q4 of fiscal 2019. By Q4 of fiscal 2022, that share of customers had risen to 69%.</p><p>Both new customers and product expansion led to CrowdStrike&#39;s full-year fiscal 2022 sales of $1.45 billion, growing 66% from fiscal 2021. While it&#39;s still not profitable because of heavy stock-based compensation, CrowdStrike is free cash flow (FCF) positive and posted a 30% FCF margin.</p><p>This is a robust company that doesn&#39;t need outside funding and works with 254 of the Fortune 500 companies. CrowdStrike management estimates it will be going after a $116 billion market opportunity by 2025, which means this cybersecurity company is just getting started and its stock should be purchased at a discount today.</p><h2>2. Autodesk</h2><p>A more mature company than CrowdStrike or Twilio, Autodesk provides vital software for engineers and architects to do their everyday job. Along with it being the industry standard in its field, it is also expanding into segments like augmented and extended reality to provide increased collaboration between designers and clients.</p><p>Autodesk is a globally diversified company, as demonstrated by the table below.</p><table border=\"1\"><tbody><tr><th>Region</th><th>Percentage of Revenue</th><th>FY 2022 YOY Growth</th></tr><tr><td>Americas</td><td>40%</td><td>14%</td></tr><tr><td>Europe, Middle East, and Africa</td><td>39%</td><td>15%</td></tr><tr><td>Asia-Pacific</td><td>21%</td><td>19%</td></tr></tbody></table><p>Source: Autodesk. YOY = Year-over-year.</p><p>Because Autodesk is a mature company, it is optimized for profits. Its annual revenue hit $4.39 billion in fiscal 2022 (ended Jan. 31), which grew 16% from fiscal 2021. Autodesk converted 34% of that revenue into free cash flow and 32% into non-GAAP (adjusted) operating income. Autodesk had a <a href=\"https://laohu8.com/S/AONE.U\">one</a>-time lease charge and tax situation that caused fiscal 2022&#39;s operating income to drop and fiscal 2021&#39;s to rise, making the non-GAAP figure more meaningful. When compared with fiscal 2021, non-GAAP operating income rose 26%.</p><p>After Autodesk&#39;s conversion to a subscription model, the company has the power to raise prices as necessary to offset any internal cost increases. Because its users are locked into the product and have few choices to switch to, Autodesk holds massive pricing power. This attribute makes this company a great stock to purchase in the market downturn.</p><h2>3. Twilio</h2><p>If you&#39;ve ever received a text from a business about an appointment reminder or a confirmation, then you&#39;ve likely interacted with Twilio&#39;s product. Its software allows non-software engineers to easily create the coding necessary to interact with customers over text, email, video, and voice. It does this through application program interfaces that basically allow users to plug and play programs to easily create communication solutions.</p><p>Twilio&#39;s financials are complicated by the numerous acquisitions it has made over the past few years. Excluding acquisitions made after Nov. 1, 2020, Twilio grew its Q4 (ending Dec. 31, 2021) sales 34% year over year and 39% when 2020&#39;s U.S. political campaign revenue is not factored in. This aligns with CEO and co-founder Jeff Lawson&#39;s guidance of at least 30% organic revenue growth over the next three years.</p><p>One mark against Twilio is its consistent unprofitability. The company has never turned a profit because it is working to capture as much market share as possible. As its growth-at-all-costs phase passes, Lawson also commented Twilio will achieve consistent non-GAAP profitability starting in 2023.</p><p>Through its time on the public markets, Twilio has rarely traded below a price-to-sales ratio of less than 10.</p><p><img src=\"https://static.tigerbbs.com/58905eae953f7616745d3867ab2dd7bc\" tg-width=\"720\" tg-height=\"433\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>TWLO PS Ratio data by YCharts</p><p>Even with the business entering into a new phase, investors can be confident they are not overpaying for this solid growth stock.</p><h2>Investor takeaway</h2><p>With stock for CrowdStrike (down 29%), Autodesk (down 38%), and Twilio (down 64%) all trading well off their all-time highs, it&#39;s time that long-term investors take another look at these businesses. Each represents a great purchasing opportunity because the businesses are not struggling the way the stock price drops would seem to indicate. Growth investors should consider scooping up each of these stocks with a three- to five-year holding period in mind.</p></body></html>","source":"fool_stock","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Got $3,000? 3 Tech Stocks to Buy and Hold for the Long Term</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nGot $3,000? 3 Tech Stocks to Buy and Hold for the Long Term\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-03-24 19:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com/investing/2022/03/24/got-3000-tech-stocks-buy-and-hold-for-long-term/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Investors with some cash sitting on the sidelines should be looking to deploy it and take advantage of some fantastic buying opportunities out there at the moment. While it's wise to always keep some ...</p>\n\n<a href=\"https://www.fool.com/investing/2022/03/24/got-3000-tech-stocks-buy-and-hold-for-long-term/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"ADSK":"欧特克","BK4211":"区域性银行","TWLO":"Twilio Inc","BK4116":"互联网服务与基础架构","BK4023":"应用软件","FCF":"第一联邦金融"},"source_url":"https://www.fool.com/investing/2022/03/24/got-3000-tech-stocks-buy-and-hold-for-long-term/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2221020070","content_text":"Investors with some cash sitting on the sidelines should be looking to deploy it and take advantage of some fantastic buying opportunities out there at the moment. While it's wise to always keep some portion of an investment portfolio in cash, remember that you are doing so with the intent to deploy it at a moment's notice when a good deal presents itself.That ready-to-go cash can now be put to use on three stocks with great long-term potential that are currently selling at discounted prices: CrowdStrike Holdings ( CRWD 1.11% ), Autodesk ( ADSK -4.30% ), and Twilio ( TWLO -1.19% ). All have been sold off significantly, yet each produced great 2021 results and each is looking forward to a similarly successful 2022.1. CrowdStrikeCybersecurity is CrowdStrike's niche, and it does it better than nearly anyone else. Through its security cloud product, CrowdStrike protects endpoints from breaches, protecting networks no matter where employees are accessing it from. With an uptick in cyberattack risk due to the Russia-Ukraine war, cybersecurity has never been more important.Customers have been quick to adopt CrowdStrike's solution. At the end of the company's 2017 fiscal year (Jan. 31, 2017), it had only 450 customers. Fast-forward five years and its customer base is up to 16,325 at the end of fiscal year 2022, with a 65% jump just from fiscal year 2021. Customers are also expanding their use of CrowdStrike's products. The company offers more than 20 different modules that perform different tasks like firewall management and malware analysis. The business had 47% of customers using four or more modules in Q4 of fiscal 2019. By Q4 of fiscal 2022, that share of customers had risen to 69%.Both new customers and product expansion led to CrowdStrike's full-year fiscal 2022 sales of $1.45 billion, growing 66% from fiscal 2021. While it's still not profitable because of heavy stock-based compensation, CrowdStrike is free cash flow (FCF) positive and posted a 30% FCF margin.This is a robust company that doesn't need outside funding and works with 254 of the Fortune 500 companies. CrowdStrike management estimates it will be going after a $116 billion market opportunity by 2025, which means this cybersecurity company is just getting started and its stock should be purchased at a discount today.2. AutodeskA more mature company than CrowdStrike or Twilio, Autodesk provides vital software for engineers and architects to do their everyday job. Along with it being the industry standard in its field, it is also expanding into segments like augmented and extended reality to provide increased collaboration between designers and clients.Autodesk is a globally diversified company, as demonstrated by the table below.RegionPercentage of RevenueFY 2022 YOY GrowthAmericas40%14%Europe, Middle East, and Africa39%15%Asia-Pacific21%19%Source: Autodesk. YOY = Year-over-year.Because Autodesk is a mature company, it is optimized for profits. Its annual revenue hit $4.39 billion in fiscal 2022 (ended Jan. 31), which grew 16% from fiscal 2021. Autodesk converted 34% of that revenue into free cash flow and 32% into non-GAAP (adjusted) operating income. Autodesk had a one-time lease charge and tax situation that caused fiscal 2022's operating income to drop and fiscal 2021's to rise, making the non-GAAP figure more meaningful. When compared with fiscal 2021, non-GAAP operating income rose 26%.After Autodesk's conversion to a subscription model, the company has the power to raise prices as necessary to offset any internal cost increases. Because its users are locked into the product and have few choices to switch to, Autodesk holds massive pricing power. This attribute makes this company a great stock to purchase in the market downturn.3. TwilioIf you've ever received a text from a business about an appointment reminder or a confirmation, then you've likely interacted with Twilio's product. Its software allows non-software engineers to easily create the coding necessary to interact with customers over text, email, video, and voice. It does this through application program interfaces that basically allow users to plug and play programs to easily create communication solutions.Twilio's financials are complicated by the numerous acquisitions it has made over the past few years. Excluding acquisitions made after Nov. 1, 2020, Twilio grew its Q4 (ending Dec. 31, 2021) sales 34% year over year and 39% when 2020's U.S. political campaign revenue is not factored in. This aligns with CEO and co-founder Jeff Lawson's guidance of at least 30% organic revenue growth over the next three years.One mark against Twilio is its consistent unprofitability. The company has never turned a profit because it is working to capture as much market share as possible. As its growth-at-all-costs phase passes, Lawson also commented Twilio will achieve consistent non-GAAP profitability starting in 2023.Through its time on the public markets, Twilio has rarely traded below a price-to-sales ratio of less than 10.TWLO PS Ratio data by YChartsEven with the business entering into a new phase, investors can be confident they are not overpaying for this solid growth stock.Investor takeawayWith stock for CrowdStrike (down 29%), Autodesk (down 38%), and Twilio (down 64%) all trading well off their all-time highs, it's time that long-term investors take another look at these businesses. Each represents a great purchasing opportunity because the businesses are not struggling the way the stock price drops would seem to indicate. Growth investors should consider scooping up each of these stocks with a three- to five-year holding period in mind.","news_type":1},"isVote":1,"tweetType":1,"viewCount":431,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"9000000000000185","authorId":"9000000000000185","name":"moonzo","avatar":"https://static.tigerbbs.com/d051d261da8127d971fe6c05affb8562","crmLevel":1,"crmLevelSwitch":0,"idStr":"9000000000000185","authorIdStr":"9000000000000185"},"content":"If it is convenient for you, you can forward it, as I am also more interested.","text":"If it is convenient for you, you can forward it, as I am also more interested.","html":"If it is convenient for you, you can forward it, as I am also more interested."}],"imageCount":0,"langContent":"EN","totalScore":0}],"hots":[{"id":9037520894,"gmtCreate":1648143450482,"gmtModify":1676534309057,"author":{"id":"4109140939305660","authorId":"4109140939305660","name":"cucurupiku","avatar":"https://community-static.tradeup.com/news/8fdb8be10cf44557885020e8cecbb37d","crmLevel":2,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4109140939305660","authorIdStr":"4109140939305660"},"themes":[],"htmlText":"Love this article and insight. Will check on them❤️❤️","listText":"Love this article and insight. Will check on them❤️❤️","text":"Love this article and insight. Will check on them❤️❤️","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9037520894","repostId":"2221020070","repostType":2,"repost":{"id":"2221020070","kind":"highlight","pubTimestamp":1648119600,"share":"https://ttm.financial/m/news/2221020070?lang=&edition=fundamental","pubTime":"2022-03-24 19:00","market":"us","language":"en","title":"Got $3,000? 3 Tech Stocks to Buy and Hold for the Long Term","url":"https://stock-news.laohu8.com/highlight/detail?id=2221020070","media":"Motley Fool","summary":"While their stocks are down significantly from their highs, each business is still growing above market pace.","content":"<html><head></head><body><p>Investors with some cash sitting on the sidelines should be looking to deploy it and take advantage of some fantastic buying opportunities out there at the moment. While it&#39;s wise to always keep some portion of an investment portfolio in cash, remember that you are doing so with the intent to deploy it at a moment&#39;s notice when a good deal presents itself.</p><p>That ready-to-go cash can now be put to use on three stocks with great long-term potential that are currently selling at discounted prices: <b>CrowdStrike</b> <b>Holdings</b> ( CRWD 1.11% ), <b>Autodesk</b> ( ADSK -4.30% ), and <b>Twilio</b> ( TWLO -1.19% ). All have been sold off significantly, yet each produced great 2021 results and each is looking forward to a similarly successful 2022.</p><h2>1. CrowdStrike</h2><p>Cybersecurity is CrowdStrike&#39;s niche, and it does it better than nearly anyone else. Through its security cloud product, CrowdStrike protects endpoints from breaches, protecting networks no matter where employees are accessing it from. With an uptick in cyberattack risk due to the Russia-Ukraine war, cybersecurity has never been more important.</p><p>Customers have been quick to adopt CrowdStrike&#39;s solution. At the end of the company&#39;s 2017 fiscal year (Jan. 31, 2017), it had only 450 customers. Fast-forward five years and its customer base is up to 16,325 at the end of fiscal year 2022, with a 65% jump just from fiscal year 2021. Customers are also expanding their use of CrowdStrike&#39;s products. The company offers more than 20 different modules that perform different tasks like firewall management and malware analysis. The business had 47% of customers using four or more modules in Q4 of fiscal 2019. By Q4 of fiscal 2022, that share of customers had risen to 69%.</p><p>Both new customers and product expansion led to CrowdStrike&#39;s full-year fiscal 2022 sales of $1.45 billion, growing 66% from fiscal 2021. While it&#39;s still not profitable because of heavy stock-based compensation, CrowdStrike is free cash flow (FCF) positive and posted a 30% FCF margin.</p><p>This is a robust company that doesn&#39;t need outside funding and works with 254 of the Fortune 500 companies. CrowdStrike management estimates it will be going after a $116 billion market opportunity by 2025, which means this cybersecurity company is just getting started and its stock should be purchased at a discount today.</p><h2>2. Autodesk</h2><p>A more mature company than CrowdStrike or Twilio, Autodesk provides vital software for engineers and architects to do their everyday job. Along with it being the industry standard in its field, it is also expanding into segments like augmented and extended reality to provide increased collaboration between designers and clients.</p><p>Autodesk is a globally diversified company, as demonstrated by the table below.</p><table border=\"1\"><tbody><tr><th>Region</th><th>Percentage of Revenue</th><th>FY 2022 YOY Growth</th></tr><tr><td>Americas</td><td>40%</td><td>14%</td></tr><tr><td>Europe, Middle East, and Africa</td><td>39%</td><td>15%</td></tr><tr><td>Asia-Pacific</td><td>21%</td><td>19%</td></tr></tbody></table><p>Source: Autodesk. YOY = Year-over-year.</p><p>Because Autodesk is a mature company, it is optimized for profits. Its annual revenue hit $4.39 billion in fiscal 2022 (ended Jan. 31), which grew 16% from fiscal 2021. Autodesk converted 34% of that revenue into free cash flow and 32% into non-GAAP (adjusted) operating income. Autodesk had a <a href=\"https://laohu8.com/S/AONE.U\">one</a>-time lease charge and tax situation that caused fiscal 2022&#39;s operating income to drop and fiscal 2021&#39;s to rise, making the non-GAAP figure more meaningful. When compared with fiscal 2021, non-GAAP operating income rose 26%.</p><p>After Autodesk&#39;s conversion to a subscription model, the company has the power to raise prices as necessary to offset any internal cost increases. Because its users are locked into the product and have few choices to switch to, Autodesk holds massive pricing power. This attribute makes this company a great stock to purchase in the market downturn.</p><h2>3. Twilio</h2><p>If you&#39;ve ever received a text from a business about an appointment reminder or a confirmation, then you&#39;ve likely interacted with Twilio&#39;s product. Its software allows non-software engineers to easily create the coding necessary to interact with customers over text, email, video, and voice. It does this through application program interfaces that basically allow users to plug and play programs to easily create communication solutions.</p><p>Twilio&#39;s financials are complicated by the numerous acquisitions it has made over the past few years. Excluding acquisitions made after Nov. 1, 2020, Twilio grew its Q4 (ending Dec. 31, 2021) sales 34% year over year and 39% when 2020&#39;s U.S. political campaign revenue is not factored in. This aligns with CEO and co-founder Jeff Lawson&#39;s guidance of at least 30% organic revenue growth over the next three years.</p><p>One mark against Twilio is its consistent unprofitability. The company has never turned a profit because it is working to capture as much market share as possible. As its growth-at-all-costs phase passes, Lawson also commented Twilio will achieve consistent non-GAAP profitability starting in 2023.</p><p>Through its time on the public markets, Twilio has rarely traded below a price-to-sales ratio of less than 10.</p><p><img src=\"https://static.tigerbbs.com/58905eae953f7616745d3867ab2dd7bc\" tg-width=\"720\" tg-height=\"433\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>TWLO PS Ratio data by YCharts</p><p>Even with the business entering into a new phase, investors can be confident they are not overpaying for this solid growth stock.</p><h2>Investor takeaway</h2><p>With stock for CrowdStrike (down 29%), Autodesk (down 38%), and Twilio (down 64%) all trading well off their all-time highs, it&#39;s time that long-term investors take another look at these businesses. Each represents a great purchasing opportunity because the businesses are not struggling the way the stock price drops would seem to indicate. Growth investors should consider scooping up each of these stocks with a three- to five-year holding period in mind.</p></body></html>","source":"fool_stock","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Got $3,000? 3 Tech Stocks to Buy and Hold for the Long Term</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nGot $3,000? 3 Tech Stocks to Buy and Hold for the Long Term\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-03-24 19:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com/investing/2022/03/24/got-3000-tech-stocks-buy-and-hold-for-long-term/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Investors with some cash sitting on the sidelines should be looking to deploy it and take advantage of some fantastic buying opportunities out there at the moment. While it's wise to always keep some ...</p>\n\n<a href=\"https://www.fool.com/investing/2022/03/24/got-3000-tech-stocks-buy-and-hold-for-long-term/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"ADSK":"欧特克","BK4211":"区域性银行","TWLO":"Twilio Inc","BK4116":"互联网服务与基础架构","BK4023":"应用软件","FCF":"第一联邦金融"},"source_url":"https://www.fool.com/investing/2022/03/24/got-3000-tech-stocks-buy-and-hold-for-long-term/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2221020070","content_text":"Investors with some cash sitting on the sidelines should be looking to deploy it and take advantage of some fantastic buying opportunities out there at the moment. While it's wise to always keep some portion of an investment portfolio in cash, remember that you are doing so with the intent to deploy it at a moment's notice when a good deal presents itself.That ready-to-go cash can now be put to use on three stocks with great long-term potential that are currently selling at discounted prices: CrowdStrike Holdings ( CRWD 1.11% ), Autodesk ( ADSK -4.30% ), and Twilio ( TWLO -1.19% ). All have been sold off significantly, yet each produced great 2021 results and each is looking forward to a similarly successful 2022.1. CrowdStrikeCybersecurity is CrowdStrike's niche, and it does it better than nearly anyone else. Through its security cloud product, CrowdStrike protects endpoints from breaches, protecting networks no matter where employees are accessing it from. With an uptick in cyberattack risk due to the Russia-Ukraine war, cybersecurity has never been more important.Customers have been quick to adopt CrowdStrike's solution. At the end of the company's 2017 fiscal year (Jan. 31, 2017), it had only 450 customers. Fast-forward five years and its customer base is up to 16,325 at the end of fiscal year 2022, with a 65% jump just from fiscal year 2021. Customers are also expanding their use of CrowdStrike's products. The company offers more than 20 different modules that perform different tasks like firewall management and malware analysis. The business had 47% of customers using four or more modules in Q4 of fiscal 2019. By Q4 of fiscal 2022, that share of customers had risen to 69%.Both new customers and product expansion led to CrowdStrike's full-year fiscal 2022 sales of $1.45 billion, growing 66% from fiscal 2021. While it's still not profitable because of heavy stock-based compensation, CrowdStrike is free cash flow (FCF) positive and posted a 30% FCF margin.This is a robust company that doesn't need outside funding and works with 254 of the Fortune 500 companies. CrowdStrike management estimates it will be going after a $116 billion market opportunity by 2025, which means this cybersecurity company is just getting started and its stock should be purchased at a discount today.2. AutodeskA more mature company than CrowdStrike or Twilio, Autodesk provides vital software for engineers and architects to do their everyday job. Along with it being the industry standard in its field, it is also expanding into segments like augmented and extended reality to provide increased collaboration between designers and clients.Autodesk is a globally diversified company, as demonstrated by the table below.RegionPercentage of RevenueFY 2022 YOY GrowthAmericas40%14%Europe, Middle East, and Africa39%15%Asia-Pacific21%19%Source: Autodesk. YOY = Year-over-year.Because Autodesk is a mature company, it is optimized for profits. Its annual revenue hit $4.39 billion in fiscal 2022 (ended Jan. 31), which grew 16% from fiscal 2021. Autodesk converted 34% of that revenue into free cash flow and 32% into non-GAAP (adjusted) operating income. Autodesk had a one-time lease charge and tax situation that caused fiscal 2022's operating income to drop and fiscal 2021's to rise, making the non-GAAP figure more meaningful. When compared with fiscal 2021, non-GAAP operating income rose 26%.After Autodesk's conversion to a subscription model, the company has the power to raise prices as necessary to offset any internal cost increases. Because its users are locked into the product and have few choices to switch to, Autodesk holds massive pricing power. This attribute makes this company a great stock to purchase in the market downturn.3. TwilioIf you've ever received a text from a business about an appointment reminder or a confirmation, then you've likely interacted with Twilio's product. Its software allows non-software engineers to easily create the coding necessary to interact with customers over text, email, video, and voice. It does this through application program interfaces that basically allow users to plug and play programs to easily create communication solutions.Twilio's financials are complicated by the numerous acquisitions it has made over the past few years. Excluding acquisitions made after Nov. 1, 2020, Twilio grew its Q4 (ending Dec. 31, 2021) sales 34% year over year and 39% when 2020's U.S. political campaign revenue is not factored in. This aligns with CEO and co-founder Jeff Lawson's guidance of at least 30% organic revenue growth over the next three years.One mark against Twilio is its consistent unprofitability. The company has never turned a profit because it is working to capture as much market share as possible. As its growth-at-all-costs phase passes, Lawson also commented Twilio will achieve consistent non-GAAP profitability starting in 2023.Through its time on the public markets, Twilio has rarely traded below a price-to-sales ratio of less than 10.TWLO PS Ratio data by YChartsEven with the business entering into a new phase, investors can be confident they are not overpaying for this solid growth stock.Investor takeawayWith stock for CrowdStrike (down 29%), Autodesk (down 38%), and Twilio (down 64%) all trading well off their all-time highs, it's time that long-term investors take another look at these businesses. Each represents a great purchasing opportunity because the businesses are not struggling the way the stock price drops would seem to indicate. Growth investors should consider scooping up each of these stocks with a three- to five-year holding period in mind.","news_type":1},"isVote":1,"tweetType":1,"viewCount":431,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"9000000000000185","authorId":"9000000000000185","name":"moonzo","avatar":"https://static.tigerbbs.com/d051d261da8127d971fe6c05affb8562","crmLevel":1,"crmLevelSwitch":0,"idStr":"9000000000000185","authorIdStr":"9000000000000185"},"content":"If it is convenient for you, you can forward it, as I am also more interested.","text":"If it is convenient for you, you can forward it, as I am also more interested.","html":"If it is convenient for you, you can forward it, as I am also more interested."}],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9017504356,"gmtCreate":1649784020416,"gmtModify":1676534575156,"author":{"id":"4109140939305660","authorId":"4109140939305660","name":"cucurupiku","avatar":"https://community-static.tradeup.com/news/8fdb8be10cf44557885020e8cecbb37d","crmLevel":2,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4109140939305660","authorIdStr":"4109140939305660"},"themes":[],"htmlText":"Time to collect good undervalued stocks","listText":"Time to collect good undervalued stocks","text":"Time to collect good undervalued stocks","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9017504356","isVote":1,"tweetType":1,"viewCount":222,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9012240364,"gmtCreate":1649343360172,"gmtModify":1676534495139,"author":{"id":"4109140939305660","authorId":"4109140939305660","name":"cucurupiku","avatar":"https://community-static.tradeup.com/news/8fdb8be10cf44557885020e8cecbb37d","crmLevel":2,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4109140939305660","authorIdStr":"4109140939305660"},"themes":[],"htmlText":"Thank you","listText":"Thank you","text":"Thank you","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9012240364","repostId":"2225564226","repostType":2,"repost":{"id":"2225564226","kind":"news","pubTimestamp":1649283691,"share":"https://ttm.financial/m/news/2225564226?lang=&edition=fundamental","pubTime":"2022-04-07 06:21","market":"us","language":"en","title":"Sleep Number: The Stock Will Wake Up Soon","url":"https://stock-news.laohu8.com/highlight/detail?id=2225564226","media":"seekingalpha","summary":"deteetarkan/iStock via Getty Images Sleep Number (NASDAQ:SNBR) is a well-managed, quality company. T","content":"<html><body><p><figure><picture><img height=\"1024px\" src=\"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1141974205/image_1141974205.jpg?io=getty-c-w750\" srcset=\"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1141974205/image_1141974205.jpg?io=getty-c-w1536 1536w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1141974205/image_1141974205.jpg?io=getty-c-w1280 1280w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1141974205/image_1141974205.jpg?io=getty-c-w1080 1080w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1141974205/image_1141974205.jpg?io=getty-c-w750 750w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1141974205/image_1141974205.jpg?io=getty-c-w640 640w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1141974205/image_1141974205.jpg?io=getty-c-w480 480w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1141974205/image_1141974205.jpg?io=getty-c-w320 320w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1141974205/image_1141974205.jpg?io=getty-c-w240 240w\" width=\"1536px\"/></picture><figcaption><p>deteetarkan/iStock via Getty Images</p></figcaption></figure></p> <p>Sleep Number (<span>NASDAQ:SNBR</span>) is a well-managed, quality company. The recent price correction offers investors a 200-300% potential return in a two/three years' time frame with limited downside risks.</p> <h2><strong>A Defensive Business</strong></h2> <p>Mattress making has a long<span> history. A few companies had been in existence for hundreds of years - e.g., both Simmons and Sealy were founded in the late 1800s and continue to make and market their mattresses under the same brand names today.</span></p> <p>The US mattress market is a $30-$40bn market in retail, growing at 5-6% annually. Sleep Number is the third-largest company with an 8% market share. The top players are Tempur Sealy International, Inc. (TPX) and Serta-Simmons - each has a 20-30% market share.</p> <p><figure><picture><span><img height=\"431\" hspace=\"6\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/4/5/7524801-16491871896743958.jpg\" vspace=\"6\" width=\"640\"/></span></picture><figcaption><p>Market Shares (Purple Investor Presentation)</p></figcaption></figure></p> <p>Innovation in mattresses is slow. The first-generation mattress appeared in the late 1800s, made with innersprings, which later evolved into pocket coils. Coil mattresses are still widely in use today, estimated at 40% as of 2020. After almost 200 years, in the early 1990s, Tempur-Pedic introduced the memory form mattress, a technology originally created for NASA in the 70s. In today's market, these two materials are still the majority of mattresses are made of. This means that the industry is quite stable and unlikely to be disrupted by some revolutionary technologies, like in many other industries.</p> <p><figure><picture><span><img height=\"404\" hspace=\"6\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/4/5/7524801-1649186929010952.jpg\" vspace=\"6\" width=\"640\"/></span></picture><figcaption><p>Mattress Type (Purple Investor Presentation)</p></figcaption></figure></p> <p>The memory foam material spurred further innovation. In 2010, Casper Sleep (privatized in 2021) introduced the bed-in-a-box. The invention greatly reduced warehousing and delivery costs and made possible a low-cost, e-commerce business model. A bed-in-a-box company can run without much asset investments. It outsources manufacturing to overseas or domestic mattress plants and focuses on online marketing. It's estimated that close to 200 such e-commerce mattress companies were in operation at <a href=\"https://laohu8.com/S/AONE.U\">one</a> time in the low-end segment. The intensified competition has greatly pushed up operating expenses, particularly the online ad costs. Making money becomes more and more difficult. Casper, the pioneer of this business model and the largest in scale, was acquired last year by a private equity firm. Until the time it was acquired, it has not made any profit.</p> <p>The high-end mattress segment accounts for 20-30% of unit sales in the US, but over 50% in value. This segment has a much better business environment as barriers to entry are much higher. One of the key barriers is simply the fact that consumers are unlikely to spend thousands of dollars on a mattress without a chance to try it out or talk to the salesperson about its premium features. Most e-commerce companies can't afford retail stores. Their low price tags also prevent them from selling through third-party retailers (e.g., furniture stores or specialty mattress stores). Over the past five years, we are seeing the premium segment grow faster than the low-ends. We expect this trend to continue.</p> <p><figure><picture><span><img height=\"417\" hspace=\"6\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/4/5/7524801-16491872762612555.jpg\" vspace=\"6\" width=\"640\"/></span></picture><figcaption><p>Mattress Market Share (Purple Investor Presentation)</p></figcaption></figure></p> <h2><strong>A Different Way to Do Business</strong></h2> <p>As physical stores are needed to sell premium products, a manufacturer, in general, has two go-to-market strategies: 1) wholesale to retailers, which includes department stores, furniture stores, and mattress specialty stores like Mattress Firm (the wholesale model), or 2) sell directly to consumers through company-owned stores (the DTC model). The wholesale model can scale up quickly, as long as manufacturing capacity can catch up. But due to a third party in between, it won't be able to establish a direct connection with its customers.</p> <p>The DTC and wholesale models also have different margin profiles. In the wholesale business, the manufacturer makes about 30-40% profit and gives 30-40% to the retailers. They, however, can save on marketing expenses, as that would be a joint effort between the manufacturer and retailers. The retailers can generally spread marketing expenses across a much wider range of products, and therefore are more efficient in terms of the use of marketing dollars. While DTC model gives the manufacturer a higher gross margin (~60%), but it also needs to spend significant marketing dollars on customer acquisitions. This is a prohibitive barrier for companies at smaller scales. Therefore, most high-end mattress firms would not go this route until it has achieved a larger scale.</p> <p>SNBR is unique in that it's a pure play of DTC model. Almost all revenues are generated through its retail network of 648 stores as of today. It's the largest in terms of manufacturer-owned retail stores in the US. Digital sales only increased recently due to COVID, accounting for about 13%. SNBR greatly benefits from having its own retailer store network, in my opinion.</p> <p>First, there is the direct relationship with customers: The DTC model enables the company to establish a direct relationship with its customers. Its Smart Sleeper community has 2.1 million members today and its award-winning InnerCircle Rewards program drives acquisition of new customers through referral and greater retention with repeat purchases.</p> <p>Second, there is better cash management: Being close to the customers has enabled the company to better manage its working capital. Sleep Number is the only mattress firm that manufactures after an order is received (the lead time is about 1-2 weeks). This greatly reduced its working capital tied in inventory.</p> <span><table> <colgroup> <col/> <col span=\"2\"/> <col/> </colgroup> <tr> <td>($mn)</td> <td><strong>SBNR</strong></td> <td><strong>TPX</strong></td> <td><strong>PRPL</strong></td> </tr> <tr> <td>Revenue</td> <td>$2,184.9</td> <td>$4,930.8</td> <td>$726.2</td> </tr> <tr> <td>Account Receivable</td> <td>$25.7</td> <td>$419.5</td> <td>$25.4</td> </tr> <tr> <td>Inventory</td> <td>$105.6</td> <td>$463.9</td> <td>$98.7</td> </tr> <tr> <td>Accounts Payable</td> <td>162.5</td> <td>432</td> <td>79.8</td> </tr> <tr> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr> <td>AR Days</td> <td>4.3</td> <td>31.1</td> <td>12.8</td> </tr> <tr> <td>Inventory Days</td> <td>17.6</td> <td>34.3</td> <td>49.6</td> </tr> <tr> <td>AP Days</td> <td>27.1</td> <td>32.0</td> <td>40.1</td> </tr> <tr> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr> <td>Cash Conversion Days</td> <td>-5.2</td> <td>33.4</td> <td>22.3</td> </tr> </table></span> <p>Third, it's better positioned in the value chain: Operating a large retail network gives the company great negotiation power with its upstream suppliers. As a result, the company can pay raw materials on terms. Other the other end, SNBR gets paid by its customers right away. This allows the company to run on negative working capital, meaning that as the company expands, it not only does not need to invest in working capital, it can actually generate more cash out of the business.</p> <p>Fourth is the long-term margin leverage from SG&amp;A expenses: As the company's store network expands, it will benefit from leverage on SG&amp;A expense, the largest portion of its expenses, ~50% of sales. This is because the general administration expenses and corporate marketing expenses could grow slower than the revenue growth. Over the past four years, SG&amp;A expense declined from 55.7% to 51.5%, about a 1% improvement per year.</p> <h2><strong>Highly Efficient Operation</strong></h2> <p>SNBR not only operates just-in-time manufacturing and inventory, its retail stores are also highly efficient. On a sales/square foot basis, SNBR is ranked the fourth top retailer in the US - right after Apple (AAPL), Tiffany, and Lululemon (LULU).</p> <span><table> <tr> <td> </td> <td><p>Average sales per store (000's)</p></td> <td><p>Average square footage per store open</p></td> <td><p>Total retail square footage</p></td> </tr> <tr> <td><p>2017</p></td> <td><p>$2,618</p></td> <td><p>2,647</p></td> <td><p>$1,489</p></td> </tr> <tr> <td><p>2018</p></td> <td><p>$2,707</p></td> <td><p>2,725</p></td> <td><p>$1,598</p></td> </tr> <tr> <td><p>2019</p></td> <td><p>$2,877</p></td> <td><p>2,802</p></td> <td><p>$1,749</p></td> </tr> <tr> <td><p>2020</p></td> <td><p>$3,052</p></td> <td><p>2,926</p></td> <td><p>$1,762</p></td> </tr> <tr> <td><p>2021</p></td> <td><p>$3,600</p></td> <td><p>3,006</p></td> <td><p>$1,948</p></td> </tr> </table></span> <p>Return on equity or invested capital (ROE or ROIC) is probably the better measures of a company's operational efficiency. On an ROIC basis, the company has improved continuously, at 27.6% in 2021. ROE is not applicable due to the company's negative equity. The negative equity, however, is not a bad thing in the SNBR case. It simply resulted from too many shares being bought back by the company.</p> <span><table> <colgroup><col span=\"6\"/></colgroup> <tr> <td> </td> <td>2017</td> <td>2018</td> <td>2019</td> <td>2020</td> <td>2021</td> </tr> <tr> <td>ROIC</td> <td>14.3%</td> <td>16.0%</td> <td>17.8%</td> <td>25.0%</td> <td>27.6%</td> </tr> </table></span> <h2><strong>Shareholder Orientated Management</strong></h2> <p>Some investors have commented that the company's low cash balance, high bank loan, and negative equity look scary. But if you understand the reasons behind them, those are actually signs of a rarely found, great-run company.</p> <p>As explained earlier, the company's negative working capital indicates that it does not require much cash in daily operations. And dealing directly with mass retail customers gives the company a better feel for market dynamics. SNBR can generally project its cash requirement ahead of the time. Keeping a minimum cash on the balance sheet can maximize the utilization of every dollar and generate the maximum value for shareholders. To be safe, the company does have a revolving credit line of $825mn up to $1.2bn in case of emergency. For the last two years, interest rates on its bank loan are merely 1.5-1.6%. Using such low-cost financial leverage further increases shareholder value.</p> <p>Each year, the company deployed the maximum amount of cash for share repurchases. As shown in the following table, SNBR spent more than twice its earnings and more than 100% of its cash from operations in share buybacks over the past five years, resulting a negative book value starting in 2018.</p> <span><table> <tr> <td><p>($mn)</p></td> <td><p><strong>2017</strong></p></td> <td><p><strong>2018</strong></p></td> <td><p><strong>2019</strong></p></td> <td><p><strong>2020</strong></p></td> <td><p><strong>2021</strong></p></td> <td><p><strong>Total</strong></p></td> </tr> <tr> <td><p>Net Income</p></td> <td><p>65.1</p></td> <td><p>69.5</p></td> <td><p>81.8</p></td> <td><p>139.2</p></td> <td><p>153.7</p></td> <td><p><strong>509.3</strong></p></td> </tr> <tr> <td><p>Cash from Operations</p></td> <td><p>172.6</p></td> <td><p>131.5</p></td> <td><p>189.2</p></td> <td><p>279.7</p></td> <td><p>300</p></td> <td><p><strong>1073</strong></p></td> </tr> <tr> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr> <td><p>Debt Issued</p></td> <td><p>28.1</p></td> <td><p>182.3</p></td> <td><p>26.4</p></td> <td><p>0</p></td> <td><p>145.5</p></td> <td><p><strong>382.3</strong></p></td> </tr> <tr> <td><p>Share Buyback</p></td> <td><p>155.2</p></td> <td><p>272.4</p></td> <td><p>165.1</p></td> <td><p>235.6</p></td> <td><p>382.4</p></td> <td><p><strong>1210.7</strong></p></td> </tr> <tr> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr> <td><p>Buyback/Net Income</p></td> <td><p>238%</p></td> <td><p>392%</p></td> <td><p>202%</p></td> <td><p>169%</p></td> <td><p>249%</p></td> <td><p><strong>238%</strong></p></td> </tr> <tr> <td><p>Buyback/CFO</p></td> <td><p>90%</p></td> <td><p>207%</p></td> <td><p>87%</p></td> <td><p>84%</p></td> <td><p>127%</p></td> <td><p><strong>113%</strong></p></td> </tr> </table></span> <h2><strong>Recent Share Decline</strong></h2> <p>Like many home goods businesses, SNBR benefited from COVID as sales grew 17.7% to $2,184.9mn in 2021 from 2020, and grew 28.6% from 2019. Net income increased 10.5% to $153.7mn from 2020, and grew 87.9% from 2019. However, the share price peaked in March 2021 and has declined more than 67% over the past year to ~$50 today, the lowest it's been in 18 months. Such a deep correction is due to the following reasons:</p> <ol> <li>As COVID eases, all stocks that had benefited from it are giving back some of the gains.</li> <li>The global chip shortage has impacted the company's 4Q21 results, with the delivery of $125mn (25% of sales) postponed into 2022. Due to this delay, margin was greatly impacted and declined to 56.86% from 61-62% normally. It looks as if the impact could last at least for the 1H22. Industry news indicates such a chip shortage could run through 2022 and won't ease until 2023-24, although several major chip manufacturers announced significant capacity expansions after this.</li> <li>Global inflation since 2021 has pushed up costs. As discussed above, as a DTC business SNBR can pass those on easier than its peers. In March, some analysts found that they started giving discounts on recent price increases, indicating weaker-than-expected demand. This will likely lead to a slide in margins. Management has guided that gross margins would face 1% pressure in 2022 from last year.</li> </ol> <h2><strong>Extremely Attractive at the Current Price</strong></h2> <p>The mattress business is defensive. The company grew sales in 18 of the last 20 years and only declined 9% during the financial crisis in 2008 and 2009. With the failing of low-end players, this premium mattress company is expected to perform better than the industry's 5-6% over the next 3-5 years. Despite a temporary slowdown, SNBR should continue to grow in the near and mid-long term. The company has guided low double-digit growth for 2022.</p> <p>SNBR is well managed, with a differentiated DTC business model. The company is able to leverage financially with low risk (by using suppliers and banks' money) to improve investment returns (27% ROIC). It also committed to significant and impactful share buybacks, the most efficient way to reward shareholders.</p> <p>Over the last five years, SNBR's revenue increased a modest 11% per year. However, its EPS grew 41% CAGR (implying its stock could increase that much if there's no change in the P/E ratio). How is that possible? Besides some margin expansion, this was achieved mainly through the company's massive share repurchase program. And the good news is that with the share count and share price both at very low levels now, the impact on EPS growth is even greater than before.</p> <p>Mathematically, EPS growth is the change in net income multiplied by the change in share counts, as depicted in the following formula:</p> <p>EPS growth = (Net Income<sub>1</sub>/Share Count<sub>1</sub>)/ (Net Income<sub>0</sub>/Share Count<sub>0</sub>)-1</p> <p>= (Net Income<sub>1</sub>/Net Income<sub>0</sub>)*(Share Count<sub>0</sub>)/(Share Count<sub>1</sub>)-1</p> <p>Because both share count and price are very low, the percentage change from share count will be much more significant than it had been. Specifically, outstanding shares today were 22mn, with the 2021 average count at about 24mn. The company has a $400mn unused quota for share repurchase; if it buys at the current level, $400mn can reduce the share count by 8mn. The growth from share count change is 50% (24/16 - 1). In two years, 16mn can be removed from the market, and growth from this alone is 200% (24/8 - 1).</p> <p>Obviously, this hypothetical exercise won't be realized since the share price won't stay at $50 for two years. But it shows that the longer it stays at low levels, the stronger it will be for the company's fundamentals. I'm sure the company is very busy buying shares from the market right now.</p> <p>More realistically, in two years' time, assuming the company spent $800mn for buybacks (operating cash flow of $300-400mn a year plus some borrowing) and purchased share at $80/sh (implying a share price range from $50 to $120/sh), that would cancel 10mn shares from the current 24mn, giving EPS a boost of 70% (24/14-1) growth. In two years' time, supply chain issue should have been resolved and if no other disruptive events are happening, the company should have grown the top line by at least 20%. The bottom line in normal business conditions should have grown by 40-50% due to margin improvement. Along with the 70% growth from share buybacks, EPS growth should be at least doubled from the 2021 level.</p> <p>But that's not all.</p> <p><figure><img height=\"366\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/4/4/saupload_37640fb1d0d4838089b0619195c37754.png\" width=\"635\"/><figcaption>Data by YCharts</figcaption></figure></p> <p>As shown above, the current P/E ratio at 8.4x is almost its historical low, except for a brief period in March 2020. The shares had been generally trading at 15-20x in normal times and close to 30x in optimistic times. Therefore, it's reasonable to expect that if in two years the business condition returns to normal, its valuation could also recover to 15-20x. That's another double from the current level.</p> <h2><strong>Conclusion</strong></h2> <p>Sleep Number, a high-quality company, has offered investors a great opportunity thanks to industry-wide, but temporary, distress. In two years' time, when such distress is over and business conditions return to normal, the shares could potentially increase to $200, quadrupling from the current ~$50 level. Even if another unforeseeable risk happened in two years, SNBR's defensive business, close-to-customers business model, strong cash generation, excellent management team, and, more importantly, deep valuation provide investors with an ample margin of safety. I'm a strong buyer at this level.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Sleep Number: The Stock Will Wake Up Soon</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSleep Number: The Stock Will Wake Up Soon\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-04-07 06:21 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4500130-significant-growth-ahead-for-sleep-number><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>deteetarkan/iStock via Getty Images Sleep Number (NASDAQ:SNBR) is a well-managed, quality company. The recent price correction offers investors a 200-300% potential return in a two/three years' time ...</p>\n\n<a href=\"https://seekingalpha.com/article/4500130-significant-growth-ahead-for-sleep-number\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BK4576":"AR","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4575":"芯片概念","BK4566":"资本集团","BK4501":"段永平概念","BK4559":"巴菲特持仓","BK4527":"明星科技股","BK4579":"人工智能","BK4550":"红杉资本持仓","TPX":"泰浦陛迪国际公司","BK4095":"家庭装饰品","BK4574":"无人驾驶","BK4573":"虚拟现实","BK4505":"高瓴资本持仓","BK4581":"高盛持仓","BK4512":"苹果概念","BK4504":"桥水持仓","BK4507":"流媒体概念","BK4202":"服装、服饰与奢侈品","SNBR":"Sleep Number Corporation","BK4170":"电脑硬件、储存设备及电脑周边","LULU":"lululemon athletica","BK4515":"5G概念","BK4554":"元宇宙及AR概念","BK4532":"文艺复兴科技持仓","AAPL":"苹果","BK4178":"家庭装饰零售","BK4553":"喜马拉雅资本持仓","BK4571":"数字音乐概念","BK4534":"瑞士信贷持仓"},"source_url":"https://seekingalpha.com/article/4500130-significant-growth-ahead-for-sleep-number","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2225564226","content_text":"deteetarkan/iStock via Getty Images Sleep Number (NASDAQ:SNBR) is a well-managed, quality company. The recent price correction offers investors a 200-300% potential return in a two/three years' time frame with limited downside risks. A Defensive Business Mattress making has a long history. A few companies had been in existence for hundreds of years - e.g., both Simmons and Sealy were founded in the late 1800s and continue to make and market their mattresses under the same brand names today. The US mattress market is a $30-$40bn market in retail, growing at 5-6% annually. Sleep Number is the third-largest company with an 8% market share. The top players are Tempur Sealy International, Inc. (TPX) and Serta-Simmons - each has a 20-30% market share. Market Shares (Purple Investor Presentation) Innovation in mattresses is slow. The first-generation mattress appeared in the late 1800s, made with innersprings, which later evolved into pocket coils. Coil mattresses are still widely in use today, estimated at 40% as of 2020. After almost 200 years, in the early 1990s, Tempur-Pedic introduced the memory form mattress, a technology originally created for NASA in the 70s. In today's market, these two materials are still the majority of mattresses are made of. This means that the industry is quite stable and unlikely to be disrupted by some revolutionary technologies, like in many other industries. Mattress Type (Purple Investor Presentation) The memory foam material spurred further innovation. In 2010, Casper Sleep (privatized in 2021) introduced the bed-in-a-box. The invention greatly reduced warehousing and delivery costs and made possible a low-cost, e-commerce business model. A bed-in-a-box company can run without much asset investments. It outsources manufacturing to overseas or domestic mattress plants and focuses on online marketing. It's estimated that close to 200 such e-commerce mattress companies were in operation at one time in the low-end segment. The intensified competition has greatly pushed up operating expenses, particularly the online ad costs. Making money becomes more and more difficult. Casper, the pioneer of this business model and the largest in scale, was acquired last year by a private equity firm. Until the time it was acquired, it has not made any profit. The high-end mattress segment accounts for 20-30% of unit sales in the US, but over 50% in value. This segment has a much better business environment as barriers to entry are much higher. One of the key barriers is simply the fact that consumers are unlikely to spend thousands of dollars on a mattress without a chance to try it out or talk to the salesperson about its premium features. Most e-commerce companies can't afford retail stores. Their low price tags also prevent them from selling through third-party retailers (e.g., furniture stores or specialty mattress stores). Over the past five years, we are seeing the premium segment grow faster than the low-ends. We expect this trend to continue. Mattress Market Share (Purple Investor Presentation) A Different Way to Do Business As physical stores are needed to sell premium products, a manufacturer, in general, has two go-to-market strategies: 1) wholesale to retailers, which includes department stores, furniture stores, and mattress specialty stores like Mattress Firm (the wholesale model), or 2) sell directly to consumers through company-owned stores (the DTC model). The wholesale model can scale up quickly, as long as manufacturing capacity can catch up. But due to a third party in between, it won't be able to establish a direct connection with its customers. The DTC and wholesale models also have different margin profiles. In the wholesale business, the manufacturer makes about 30-40% profit and gives 30-40% to the retailers. They, however, can save on marketing expenses, as that would be a joint effort between the manufacturer and retailers. The retailers can generally spread marketing expenses across a much wider range of products, and therefore are more efficient in terms of the use of marketing dollars. While DTC model gives the manufacturer a higher gross margin (~60%), but it also needs to spend significant marketing dollars on customer acquisitions. This is a prohibitive barrier for companies at smaller scales. Therefore, most high-end mattress firms would not go this route until it has achieved a larger scale. SNBR is unique in that it's a pure play of DTC model. Almost all revenues are generated through its retail network of 648 stores as of today. It's the largest in terms of manufacturer-owned retail stores in the US. Digital sales only increased recently due to COVID, accounting for about 13%. SNBR greatly benefits from having its own retailer store network, in my opinion. First, there is the direct relationship with customers: The DTC model enables the company to establish a direct relationship with its customers. Its Smart Sleeper community has 2.1 million members today and its award-winning InnerCircle Rewards program drives acquisition of new customers through referral and greater retention with repeat purchases. Second, there is better cash management: Being close to the customers has enabled the company to better manage its working capital. Sleep Number is the only mattress firm that manufactures after an order is received (the lead time is about 1-2 weeks). This greatly reduced its working capital tied in inventory.        ($mn) SBNR TPX PRPL   Revenue $2,184.9 $4,930.8 $726.2   Account Receivable $25.7 $419.5 $25.4   Inventory $105.6 $463.9 $98.7   Accounts Payable 162.5 432 79.8             AR Days 4.3 31.1 12.8   Inventory Days 17.6 34.3 49.6   AP Days 27.1 32.0 40.1             Cash Conversion Days -5.2 33.4 22.3   Third, it's better positioned in the value chain: Operating a large retail network gives the company great negotiation power with its upstream suppliers. As a result, the company can pay raw materials on terms. Other the other end, SNBR gets paid by its customers right away. This allows the company to run on negative working capital, meaning that as the company expands, it not only does not need to invest in working capital, it can actually generate more cash out of the business. Fourth is the long-term margin leverage from SG&A expenses: As the company's store network expands, it will benefit from leverage on SG&A expense, the largest portion of its expenses, ~50% of sales. This is because the general administration expenses and corporate marketing expenses could grow slower than the revenue growth. Over the past four years, SG&A expense declined from 55.7% to 51.5%, about a 1% improvement per year. Highly Efficient Operation SNBR not only operates just-in-time manufacturing and inventory, its retail stores are also highly efficient. On a sales/square foot basis, SNBR is ranked the fourth top retailer in the US - right after Apple (AAPL), Tiffany, and Lululemon (LULU).     Average sales per store (000's) Average square footage per store open Total retail square footage   2017 $2,618 2,647 $1,489   2018 $2,707 2,725 $1,598   2019 $2,877 2,802 $1,749   2020 $3,052 2,926 $1,762   2021 $3,600 3,006 $1,948   Return on equity or invested capital (ROE or ROIC) is probably the better measures of a company's operational efficiency. On an ROIC basis, the company has improved continuously, at 27.6% in 2021. ROE is not applicable due to the company's negative equity. The negative equity, however, is not a bad thing in the SNBR case. It simply resulted from too many shares being bought back by the company.      2017 2018 2019 2020 2021   ROIC 14.3% 16.0% 17.8% 25.0% 27.6%   Shareholder Orientated Management Some investors have commented that the company's low cash balance, high bank loan, and negative equity look scary. But if you understand the reasons behind them, those are actually signs of a rarely found, great-run company. As explained earlier, the company's negative working capital indicates that it does not require much cash in daily operations. And dealing directly with mass retail customers gives the company a better feel for market dynamics. SNBR can generally project its cash requirement ahead of the time. Keeping a minimum cash on the balance sheet can maximize the utilization of every dollar and generate the maximum value for shareholders. To be safe, the company does have a revolving credit line of $825mn up to $1.2bn in case of emergency. For the last two years, interest rates on its bank loan are merely 1.5-1.6%. Using such low-cost financial leverage further increases shareholder value. Each year, the company deployed the maximum amount of cash for share repurchases. As shown in the following table, SNBR spent more than twice its earnings and more than 100% of its cash from operations in share buybacks over the past five years, resulting a negative book value starting in 2018.   ($mn) 2017 2018 2019 2020 2021 Total   Net Income 65.1 69.5 81.8 139.2 153.7 509.3   Cash from Operations 172.6 131.5 189.2 279.7 300 1073                   Debt Issued 28.1 182.3 26.4 0 145.5 382.3   Share Buyback 155.2 272.4 165.1 235.6 382.4 1210.7                   Buyback/Net Income 238% 392% 202% 169% 249% 238%   Buyback/CFO 90% 207% 87% 84% 127% 113%   Recent Share Decline Like many home goods businesses, SNBR benefited from COVID as sales grew 17.7% to $2,184.9mn in 2021 from 2020, and grew 28.6% from 2019. Net income increased 10.5% to $153.7mn from 2020, and grew 87.9% from 2019. However, the share price peaked in March 2021 and has declined more than 67% over the past year to ~$50 today, the lowest it's been in 18 months. Such a deep correction is due to the following reasons:  As COVID eases, all stocks that had benefited from it are giving back some of the gains. The global chip shortage has impacted the company's 4Q21 results, with the delivery of $125mn (25% of sales) postponed into 2022. Due to this delay, margin was greatly impacted and declined to 56.86% from 61-62% normally. It looks as if the impact could last at least for the 1H22. Industry news indicates such a chip shortage could run through 2022 and won't ease until 2023-24, although several major chip manufacturers announced significant capacity expansions after this. Global inflation since 2021 has pushed up costs. As discussed above, as a DTC business SNBR can pass those on easier than its peers. In March, some analysts found that they started giving discounts on recent price increases, indicating weaker-than-expected demand. This will likely lead to a slide in margins. Management has guided that gross margins would face 1% pressure in 2022 from last year.  Extremely Attractive at the Current Price The mattress business is defensive. The company grew sales in 18 of the last 20 years and only declined 9% during the financial crisis in 2008 and 2009. With the failing of low-end players, this premium mattress company is expected to perform better than the industry's 5-6% over the next 3-5 years. Despite a temporary slowdown, SNBR should continue to grow in the near and mid-long term. The company has guided low double-digit growth for 2022. SNBR is well managed, with a differentiated DTC business model. The company is able to leverage financially with low risk (by using suppliers and banks' money) to improve investment returns (27% ROIC). It also committed to significant and impactful share buybacks, the most efficient way to reward shareholders. Over the last five years, SNBR's revenue increased a modest 11% per year. However, its EPS grew 41% CAGR (implying its stock could increase that much if there's no change in the P/E ratio). How is that possible? Besides some margin expansion, this was achieved mainly through the company's massive share repurchase program. And the good news is that with the share count and share price both at very low levels now, the impact on EPS growth is even greater than before. Mathematically, EPS growth is the change in net income multiplied by the change in share counts, as depicted in the following formula: EPS growth = (Net Income1/Share Count1)/ (Net Income0/Share Count0)-1 = (Net Income1/Net Income0)*(Share Count0)/(Share Count1)-1 Because both share count and price are very low, the percentage change from share count will be much more significant than it had been. Specifically, outstanding shares today were 22mn, with the 2021 average count at about 24mn. The company has a $400mn unused quota for share repurchase; if it buys at the current level, $400mn can reduce the share count by 8mn. The growth from share count change is 50% (24/16 - 1). In two years, 16mn can be removed from the market, and growth from this alone is 200% (24/8 - 1). Obviously, this hypothetical exercise won't be realized since the share price won't stay at $50 for two years. But it shows that the longer it stays at low levels, the stronger it will be for the company's fundamentals. I'm sure the company is very busy buying shares from the market right now. More realistically, in two years' time, assuming the company spent $800mn for buybacks (operating cash flow of $300-400mn a year plus some borrowing) and purchased share at $80/sh (implying a share price range from $50 to $120/sh), that would cancel 10mn shares from the current 24mn, giving EPS a boost of 70% (24/14-1) growth. In two years' time, supply chain issue should have been resolved and if no other disruptive events are happening, the company should have grown the top line by at least 20%. The bottom line in normal business conditions should have grown by 40-50% due to margin improvement. Along with the 70% growth from share buybacks, EPS growth should be at least doubled from the 2021 level. But that's not all. Data by YCharts As shown above, the current P/E ratio at 8.4x is almost its historical low, except for a brief period in March 2020. The shares had been generally trading at 15-20x in normal times and close to 30x in optimistic times. Therefore, it's reasonable to expect that if in two years the business condition returns to normal, its valuation could also recover to 15-20x. That's another double from the current level. Conclusion Sleep Number, a high-quality company, has offered investors a great opportunity thanks to industry-wide, but temporary, distress. In two years' time, when such distress is over and business conditions return to normal, the shares could potentially increase to $200, quadrupling from the current ~$50 level. Even if another unforeseeable risk happened in two years, SNBR's defensive business, close-to-customers business model, strong cash generation, excellent management team, and, more importantly, deep valuation provide investors with an ample margin of safety. I'm a strong buyer at this level.","news_type":1},"isVote":1,"tweetType":1,"viewCount":236,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9010544096,"gmtCreate":1648434573847,"gmtModify":1676534337540,"author":{"id":"4109140939305660","authorId":"4109140939305660","name":"cucurupiku","avatar":"https://community-static.tradeup.com/news/8fdb8be10cf44557885020e8cecbb37d","crmLevel":2,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4109140939305660","authorIdStr":"4109140939305660"},"themes":[],"htmlText":"Been watching on Adobe too. It has great business performance so I agree with you. This is a good company that will continue to&nbsp;grow.&nbsp;","listText":"Been watching on Adobe too. It has great business performance so I agree with you. This is a good company that will continue to&nbsp;grow.&nbsp;","text":"Been watching on Adobe too. It has great business performance so I agree with you. This is a good company that will continue to grow.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9010544096","repostId":"2222597868","repostType":2,"repost":{"id":"2222597868","kind":"news","pubTimestamp":1648370309,"share":"https://ttm.financial/m/news/2222597868?lang=&edition=fundamental","pubTime":"2022-03-27 16:38","market":"us","language":"en","title":"Buy Adobe Before It Takes Off Higher","url":"https://stock-news.laohu8.com/highlight/detail?id=2222597868","media":"seekingalpha","summary":"David Tran/iStock Editorial via Getty Images Software stocks have been absolutely hideous so far thi","content":"<html><body><p><figure><picture> <img height=\"1152px\" src=\"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1007845610/image_1007845610.jpg?io=getty-c-w750\" srcset=\"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1007845610/image_1007845610.jpg?io=getty-c-w1536 1536w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1007845610/image_1007845610.jpg?io=getty-c-w1280 1280w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1007845610/image_1007845610.jpg?io=getty-c-w1080 1080w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1007845610/image_1007845610.jpg?io=getty-c-w750 750w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1007845610/image_1007845610.jpg?io=getty-c-w640 640w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1007845610/image_1007845610.jpg?io=getty-c-w480 480w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1007845610/image_1007845610.jpg?io=getty-c-w320 320w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1007845610/image_1007845610.jpg?io=getty-c-w240 240w\" width=\"1536px\"/> </picture><figcaption> <p>David Tran/iStock Editorial via Getty Images</p></figcaption></figure></p> <p>Software stocks have been absolutely hideous so far this year. The group is highly correlated to investors’ collective willingness to pay high multiples for high growth stocks, and of course, that willingness waned essentially immediately in early-2022. Most of the group has been decimated, and former leader <strong><a href=\"https://laohu8.com/S/ADBE\">Adobe</a> Inc.</strong> (<span>NASDAQ:ADBE</span>) is no different. The stock has lost almost 40% of its value just since December, but I think the selloff is overdone.</p><div></div> <p><figure><picture> <span><img loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/3/26/5847171-16482929769284537.png\"/></span> </picture><figcaption><p><span>StockCharts</span></p></figcaption></figure></p> <p>Let’s begin with the chart, and straightway, we can see there was a deep and sustained downtrend that I believe is breaking. Shares plummeted in more-or-less a straight line from $700 to $415, and has bounced around that level for the past few weeks. Importantly, this behavior looks like bottoming, and if we look at the momentum indicators, we see more evidence we may be bottoming.</p> <p>The accumulation/distribution line is weak, so that’s not necessarily supportive of a bottom. However, the momentum indicators look quite good.</p> <p>The PPO bottomed back in January, which is well ahead of the stock bottoming. That’s a positive divergence, and this sort of thing can often portend the end of a downtrend. To my eye, that’s exactly what this positive divergence is doing, and we can see it’s still very much in play three months later. The stock has continued to decline while momentum has improved, and that’s a good sign.</p> <p>We see similar behavior from the 14-day RSI, as it bottomed some time ago, and well ahead of the stock bottoming. The combination of these factors make me think we’ve got a bottoming process in place, but we’ll need price action to eventually confirm this.</p> <p>Let’s now take a look at relative strength from both the software group as a whole, and Adobe’s strength against the group.</p> <p><figure><picture> <span><img loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/3/26/5847171-16482929768359077.png\"/></span> </picture><figcaption><p><span>StockCharts</span></p></figcaption></figure></p><div></div> <p>As you might expect from a stock that’s lost ~40% of its value, Adobe’s relative strength has been awful. Software stocks have been destroyed since the start of the year, and Adobe has managed to underperform the weak group. This is not what you want from a stock, but in this case, I think the combination of the positive divergences in momentum, and the price action that looks like it’s trying to bottom are able to offset this weakness.</p> <p>Now, let’s take a look at the fundamental case for Adobe.</p> <h2>Leverage to the cloud mega-trend</h2> <p>Let’s begin with an overall look at revenue revisions, which gives you not only a look at the company’s year-over-year growth, but the ability of analysts to keep pace with the company’s actual performance. In both cases, I think Adobe looks just fine.</p> <p><figure><picture> <span><img loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/3/26/5847171-1648292976877303.png\"/></span> </picture><figcaption><p><span>Seeking Alpha</span></p></figcaption></figure></p> <p>This has the look of a bullish long-term story, in that revenue moves up and to the right, and there are meaningful gaps between the years, indicating year-over-year growth. For instance, 2027 estimates have moved from $28 billion to $42 billion in the past three years, which is the kind of move you can get on the out years for a company that is absolutely crushing it. The short-term oscillations in revisions can cause the stock to move up or down, but over time, I fully expect we’ll see stronger and stronger revenue estimates for Adobe.</p> <p>Adobe’s growth has come from a variety of sources, and that’s part of the reason why I think the selloff is overdone. Software and other growth stocks have been crushed for a variety of reasons this year, but long-term fundamental performance isn’t <a href=\"https://laohu8.com/S/AONE.U\">one</a> of them, in my view.</p> <p>Adobe’s most recent quarter showed continued strength in revenue, with the adjusted top line at +17% year-over-year. But apart from that, the company’s remaining performance obligations grew 19% to nearly $14 billion. That’s about three quarters’ worth of revenue and it portends great things for Adobe’s continued revenue growth.</p><div></div> <p>The Creative Cloud segment continues to show robust growth as its flagship offerings such as Photoshop, Illustrator, and Premiere continue to attract higher subscription revenue. That’s one of the reasons Adobe and other software stocks are so attractive, because subscription revenue has extremely high margins, and is recurring. Adobe isn’t getting paid each time someone uses Photoshop; it is getting paid all the time whether they use it or not.</p> <p>In addition, the company notes newer products like Frame.io, which was acquired last year, continue to ramp and benefit from Adobe’s brand name recognition and massive scale.</p> <p>Adobe also has a strong position in the much smaller Document Cloud segment, but is a segment that really took off higher following the start of the pandemic. Digital signatures and document collaboration is something that I believe is here to stay, whether offices reopen fully or not, and Adobe is squarely in the middle of that market with its Acrobat suite. With PDF for mobile and other similar products, this market should be another long-term tailwind for Adobe.</p> <p>Adobe’s second quarter guidance reflects this in that the company expects $440 million in net new annual recurring revenue in Digital Media, and $4.34 billion in total. Growth rates are expected to be in the mid-teens on an adjusted basis, so in that vein, it’s hard to see why the stock is at a 52-week low.</p> <h2>Margins in focus</h2> <p>As a software stock, Adobe has outstanding margins. That doesn’t mark it aside from others in the group, but I think there’s a very strong margin growth story at play here, which just might mark it aside.</p> <p><figure><picture> <span><img loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/3/26/5847171-16482929771101315.png\"/></span> </picture><figcaption><p><span>TIKR</span></p></figcaption></figure></p> <p>This first view is trailing-twelve-months revenue against gross margins. This gives us an idea of margin leverage from higher revenue, which is something you’d expect from a software company. We can see in the past three years, Adobe has seen very strong gross margin expansion, with the most recent values in the area of 88%. That’s extremely high, and it leaves little room for potential improvement, simply because the value is already outstanding.</p><div></div> <p>However, operating margin is a different story, as the elevated revenue value allows Adobe to generate leverage on its SG&amp;A costs; that’s charted below.</p> <p><figure><picture> <span><img loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/3/26/5847171-16482929768481126.png\"/></span> </picture><figcaption><p><span>TIKR</span></p></figcaption></figure></p> <p>The difference between these two numbers, more or less, is operating margin. You can see SG&amp;A has declined over time, and there’s no reason this shouldn’t continue to occur in the years to come. This is mostly a function of higher revenue leveraging down costs like salaries, office space, etc. As gross margins rise, this leverage is supercharged and creates higher profits.</p> <p><figure><picture> <span><img loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/3/26/5847171-1648292976764624.png\"/></span> </picture><figcaption><p><span>TIKR</span></p></figcaption></figure></p> <p>Here’s a look at what I’m on about, and we can see operating margin has risen from 28% to 36% in the past three years, which has done wonders for the company’s profitability. It is entirely possible – and perhaps even likely – that we’ll see Adobe produce higher revenue, which will drive operating margins higher, all else equal. All of these things – revenue growth, SG&amp;A leverage, and operating margin improvements – drive EPS higher over time. All else equal, that means a higher share price, and that’s what I believe we’ll see.</p> <p>Over time, Adobe has certainly produced higher estimates with EPS. However, we can see the most recent revisions have been lower, and that’s certainly a factor in why the stock is down.</p><div></div> <p><figure><picture> <span><img loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/3/26/5847171-1648292977903516.png\"/></span> </picture><figcaption><p><span>Seeking Alpha</span></p></figcaption></figure></p> <p>If you have a longer horizon, however, these short-term oscillations can present opportunities, as I believe this selloff is today. Adobe has enormous brand recognition in the areas it competes, and the pandemic accelerated the adoption of certain tools Adobe offers. The odds are Adobe is going to see more and more strength in the years to come, downward revisions notwithstanding at the moment.</p> <h2>Final thoughts</h2> <p>I like the look of the bottoming action we’re seeing in Adobe, but I also very much think this company will remain a leader for years to come. It is acquiring and growing organically to fuel top line expansion in the years to come, and its margins are outstanding. The last piece is the valuation, and as we’ll see, that’s very attractive as well.</p> <p><figure><picture> <span><img loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/3/26/5847171-16482929779033117.png\"/></span> </picture><figcaption><p><span>TIKR</span></p></figcaption></figure></p> <p>Shares go for just 30X forward earnings today, which is very near the valuation it traded for at the worst of the pandemic selling. The stock peaked over 50X earnings last year, so the valuation is pricing in a lot of negativity. I believe the stock is being priced like Adobe cannot reach its growth estimates, but all indications are that it will. If I’m right, we could easily see 40X earnings, in addition to the ample growth that should be ahead. With all that in mind, I think we’ll see Adobe much higher into the later part of this year. Given it’s in the middle of a bottoming process, it will take some patience, but that patience is likely to be handsomely rewarded.</p>\n</body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Buy Adobe Before It Takes Off Higher</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nBuy Adobe Before It Takes Off Higher\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-03-27 16:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4497986-buy-adobe-before-it-takes-off-higher><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>David Tran/iStock Editorial via Getty Images Software stocks have been absolutely hideous so far this year. The group is highly correlated to investors’ collective willingness to pay high multiples ...</p>\n\n<a href=\"https://seekingalpha.com/article/4497986-buy-adobe-before-it-takes-off-higher\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BK4567":"ESG概念","BK4534":"瑞士信贷持仓","BK4527":"明星科技股","ADBE":"Adobe","BK4581":"高盛持仓","BK4528":"SaaS概念","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4023":"应用软件","BK4566":"资本集团","BK4554":"元宇宙及AR概念"},"source_url":"https://seekingalpha.com/article/4497986-buy-adobe-before-it-takes-off-higher","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2222597868","content_text":"David Tran/iStock Editorial via Getty Images Software stocks have been absolutely hideous so far this year. The group is highly correlated to investors’ collective willingness to pay high multiples for high growth stocks, and of course, that willingness waned essentially immediately in early-2022. Most of the group has been decimated, and former leader Adobe Inc. (NASDAQ:ADBE) is no different. The stock has lost almost 40% of its value just since December, but I think the selloff is overdone.   StockCharts Let’s begin with the chart, and straightway, we can see there was a deep and sustained downtrend that I believe is breaking. Shares plummeted in more-or-less a straight line from $700 to $415, and has bounced around that level for the past few weeks. Importantly, this behavior looks like bottoming, and if we look at the momentum indicators, we see more evidence we may be bottoming. The accumulation/distribution line is weak, so that’s not necessarily supportive of a bottom. However, the momentum indicators look quite good. The PPO bottomed back in January, which is well ahead of the stock bottoming. That’s a positive divergence, and this sort of thing can often portend the end of a downtrend. To my eye, that’s exactly what this positive divergence is doing, and we can see it’s still very much in play three months later. The stock has continued to decline while momentum has improved, and that’s a good sign. We see similar behavior from the 14-day RSI, as it bottomed some time ago, and well ahead of the stock bottoming. The combination of these factors make me think we’ve got a bottoming process in place, but we’ll need price action to eventually confirm this. Let’s now take a look at relative strength from both the software group as a whole, and Adobe’s strength against the group.   StockCharts As you might expect from a stock that’s lost ~40% of its value, Adobe’s relative strength has been awful. Software stocks have been destroyed since the start of the year, and Adobe has managed to underperform the weak group. This is not what you want from a stock, but in this case, I think the combination of the positive divergences in momentum, and the price action that looks like it’s trying to bottom are able to offset this weakness. Now, let’s take a look at the fundamental case for Adobe. Leverage to the cloud mega-trend Let’s begin with an overall look at revenue revisions, which gives you not only a look at the company’s year-over-year growth, but the ability of analysts to keep pace with the company’s actual performance. In both cases, I think Adobe looks just fine.   Seeking Alpha This has the look of a bullish long-term story, in that revenue moves up and to the right, and there are meaningful gaps between the years, indicating year-over-year growth. For instance, 2027 estimates have moved from $28 billion to $42 billion in the past three years, which is the kind of move you can get on the out years for a company that is absolutely crushing it. The short-term oscillations in revisions can cause the stock to move up or down, but over time, I fully expect we’ll see stronger and stronger revenue estimates for Adobe. Adobe’s growth has come from a variety of sources, and that’s part of the reason why I think the selloff is overdone. Software and other growth stocks have been crushed for a variety of reasons this year, but long-term fundamental performance isn’t one of them, in my view. Adobe’s most recent quarter showed continued strength in revenue, with the adjusted top line at +17% year-over-year. But apart from that, the company’s remaining performance obligations grew 19% to nearly $14 billion. That’s about three quarters’ worth of revenue and it portends great things for Adobe’s continued revenue growth. The Creative Cloud segment continues to show robust growth as its flagship offerings such as Photoshop, Illustrator, and Premiere continue to attract higher subscription revenue. That’s one of the reasons Adobe and other software stocks are so attractive, because subscription revenue has extremely high margins, and is recurring. Adobe isn’t getting paid each time someone uses Photoshop; it is getting paid all the time whether they use it or not. In addition, the company notes newer products like Frame.io, which was acquired last year, continue to ramp and benefit from Adobe’s brand name recognition and massive scale. Adobe also has a strong position in the much smaller Document Cloud segment, but is a segment that really took off higher following the start of the pandemic. Digital signatures and document collaboration is something that I believe is here to stay, whether offices reopen fully or not, and Adobe is squarely in the middle of that market with its Acrobat suite. With PDF for mobile and other similar products, this market should be another long-term tailwind for Adobe. Adobe’s second quarter guidance reflects this in that the company expects $440 million in net new annual recurring revenue in Digital Media, and $4.34 billion in total. Growth rates are expected to be in the mid-teens on an adjusted basis, so in that vein, it’s hard to see why the stock is at a 52-week low. Margins in focus As a software stock, Adobe has outstanding margins. That doesn’t mark it aside from others in the group, but I think there’s a very strong margin growth story at play here, which just might mark it aside.   TIKR This first view is trailing-twelve-months revenue against gross margins. This gives us an idea of margin leverage from higher revenue, which is something you’d expect from a software company. We can see in the past three years, Adobe has seen very strong gross margin expansion, with the most recent values in the area of 88%. That’s extremely high, and it leaves little room for potential improvement, simply because the value is already outstanding. However, operating margin is a different story, as the elevated revenue value allows Adobe to generate leverage on its SG&A costs; that’s charted below.   TIKR The difference between these two numbers, more or less, is operating margin. You can see SG&A has declined over time, and there’s no reason this shouldn’t continue to occur in the years to come. This is mostly a function of higher revenue leveraging down costs like salaries, office space, etc. As gross margins rise, this leverage is supercharged and creates higher profits.   TIKR Here’s a look at what I’m on about, and we can see operating margin has risen from 28% to 36% in the past three years, which has done wonders for the company’s profitability. It is entirely possible – and perhaps even likely – that we’ll see Adobe produce higher revenue, which will drive operating margins higher, all else equal. All of these things – revenue growth, SG&A leverage, and operating margin improvements – drive EPS higher over time. All else equal, that means a higher share price, and that’s what I believe we’ll see. Over time, Adobe has certainly produced higher estimates with EPS. However, we can see the most recent revisions have been lower, and that’s certainly a factor in why the stock is down.   Seeking Alpha If you have a longer horizon, however, these short-term oscillations can present opportunities, as I believe this selloff is today. Adobe has enormous brand recognition in the areas it competes, and the pandemic accelerated the adoption of certain tools Adobe offers. The odds are Adobe is going to see more and more strength in the years to come, downward revisions notwithstanding at the moment. Final thoughts I like the look of the bottoming action we’re seeing in Adobe, but I also very much think this company will remain a leader for years to come. It is acquiring and growing organically to fuel top line expansion in the years to come, and its margins are outstanding. The last piece is the valuation, and as we’ll see, that’s very attractive as well.   TIKR Shares go for just 30X forward earnings today, which is very near the valuation it traded for at the worst of the pandemic selling. The stock peaked over 50X earnings last year, so the valuation is pricing in a lot of negativity. I believe the stock is being priced like Adobe cannot reach its growth estimates, but all indications are that it will. If I’m right, we could easily see 40X earnings, in addition to the ample growth that should be ahead. With all that in mind, I think we’ll see Adobe much higher into the later part of this year. Given it’s in the middle of a bottoming process, it will take some patience, but that patience is likely to be handsomely rewarded.","news_type":1},"isVote":1,"tweetType":1,"viewCount":291,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}