Key insights
- The author expresses bearish sentiment towards US growth stocks, particularly the 'Mag 7,' citing high interest rates, oil prices, and volatility. They highlight a Hong Kong-listed company, WRD, as an example of a company with strong revenue growth and a stock buyback program, suggesting it offers a valuation floor compared to US tech companies that dilute shareholders. This implies a preference for companies with strong balance sheets in the current market environment, signaling a potential shift away from speculative growth.
With Brent crude sitting at $101 and the Strait of Hormuz situation killing the rate cut hopium we had, the market is punishing Mag 7, even some boring one like gold or silver. in a high-rate, high-volatility environment right now with the oil spike, I prefer a company that uses its balance sheet to defend its own stock price. Take a look at WRD did on HKEX, Q4 earnings with 123% YoY revenue growth is wild, they also just decided to nuke nearly 1% of their Class A float in a single day buyback ($24M), this is part of $100m program they just authorized. When a company is growing revenue by 90% annually and management is stepping in to buy back, they are setting a valuation floor. Most speculative tech are too busy diluting shareholders to survive, this one is different.