There is a funny thing to consider when buying stocks, or when looking at the performance of a company's stock price, relative to the amount of money they earn: investor sentiment.
Take, for example, the results of one of Canada's (and for that matter, North America's) most well-known technology companies. Although the numbers were up nicely and ahead of the average analyst expectations, investors continue to hate on the company because of one metric: North American subscriber growth. Never mind the fact that this company has grown sales overseas by massive amounts, nor that they still have an incredible amount of upside in some of these markets. All people can focus on is how their devices are selling relative to the competition here at home.
The result of this is that you can buy this company with a stellar growth rate for less than 10 x trailing earnings. You would have to pay double these amounts to buy stock in Apple.
Why?
Investor sentiment. It's actually a beautiful thing if you like buying great companies at low prices. All you have to do is be willing to buy when others are selling and hold until those sellers turn into buyers again. That's when money is made.
If you already hold a company that gets negative press, then you need to have the conviction to follow your strategy, even when news might not be so good. In the end, it pays off.
Happy investing.
P.S. I never said anything about 52 CONSECUTIVE weeks, did I? And yes, I had a great summer, thank you very much!
