I published this chart two weeks ago and it continues to accumulate and set-up for an advance in 2015. Earnings aren't due for a number of weeks and the year-end has made for some additional tax-loss selling to keep pressure on the share price.
The Valuation is at the lower-end of the historical range you can see on the bottom graph where PSR ranges from just under 5 times sales to several spikes in excess of 10 times sales. I don't advocate buying any stock with a PSR over 10, in general, unless their sales are growing 100% a year or they have a combination of sales growth and margins that add up to 100%. (50% sales growth +50% margins = 100% = 10 times sales).
You can see that Pandora's margins are rising, but are still negative at -3.95% at the latest reading (2nd chart from the bottom). You can also see that Pandora's sales are charging ahead at a fast clip. From 2013-2014, Pandora's sales increased from $383MM to $588MM (MM=Million). That's nearly a 50% increase. October 2013 to October 2014 is an increase from $527 to $853MM, which is an increase greater than 50%, so sales are accelerating at a fast rate.
You can see the declining wedge price pattern, which is indicative of depressed shareholder mindset and a build-up of negative price momentum. Weak stock prices invite short selling and trend-following, which becomes a catalyst for upside surprise when good news comes out. We always enjoy plenty of wrong-way traders on the other side of our trade and a big short position would be a great tailwind should Pandora keep the pace going for the another quarter. This is the time of year when I listen to holiday music on Pandora, so I have Pandora on my mind.
Use a $15-$16 stop loss and look for upside to the $25-$30 area for the upcoming 1st Quarter.
Cheers.
Tim 11:55AM EST, December 22, 2014
The Valuation is at the lower-end of the historical range you can see on the bottom graph where PSR ranges from just under 5 times sales to several spikes in excess of 10 times sales. I don't advocate buying any stock with a PSR over 10, in general, unless their sales are growing 100% a year or they have a combination of sales growth and margins that add up to 100%. (50% sales growth +50% margins = 100% = 10 times sales).
You can see that Pandora's margins are rising, but are still negative at -3.95% at the latest reading (2nd chart from the bottom). You can also see that Pandora's sales are charging ahead at a fast clip. From 2013-2014, Pandora's sales increased from $383MM to $588MM (MM=Million). That's nearly a 50% increase. October 2013 to October 2014 is an increase from $527 to $853MM, which is an increase greater than 50%, so sales are accelerating at a fast rate.
You can see the declining wedge price pattern, which is indicative of depressed shareholder mindset and a build-up of negative price momentum. Weak stock prices invite short selling and trend-following, which becomes a catalyst for upside surprise when good news comes out. We always enjoy plenty of wrong-way traders on the other side of our trade and a big short position would be a great tailwind should Pandora keep the pace going for the another quarter. This is the time of year when I listen to holiday music on Pandora, so I have Pandora on my mind.
Use a $15-$16 stop loss and look for upside to the $25-$30 area for the upcoming 1st Quarter.
Cheers.
Tim 11:55AM EST, December 22, 2014
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