Stocks For an extended period of time I kept scratching my head wondering how high some of these big tech names could keep climbing with many valuations somewhat defying common sense. Well, to some degree some of the market darlings came back a bit closer to earth last week. Nvidia, which has been the most talked about company for the past 18 months sent shivers through the Nasdaq market as it dropped by 10% on Friday and is now down roughly 22% from its all-time highs it reached a month ago. The domino effect impacted a whole bunch of other AI related names, and it now has some investors re-assessing their views of the sector. Nvidia, like a lot of big tech names was priced for perfection.
When things are priced for perfection, meaning every positive possible outcome is priced into the stock, you don’t need a lot of things to go wrong for the stock to see a sharp drop in price. The reverse is true for stocks that are extremely mispriced to the downside, you don’t need a lot of things to go right for cheap stocks to move higher. It’s a reason to try and reflect on the sentiment for a stock or sector and of course how well known or “discovered” a stock might be.
It's why I have been so bullish on profitable and growing microcaps and generally negative on the big well known names. These smaller companies continue to offer better value in my opinion, although many have had meteoric increases in shares price over the past year. This week we had a shorter list of companies reaching their 52-week highs. Once again ADF Group makes the list along with other SCD favorites, Atlas Engineered Products (AEP.V), Biorem (BRM.V) and Thermal Energy (TMG.V).
This week we had year end results from long time SCD favourite BeWhere Holdings (BEW.V). The company delivered solid numbers with revenues for the full year up 20% and Q4 results 41% higher than last year. A good jump in hardware sales in Q4 bodes well for higher recurring revenues as the company sells hardware at no/low profit to capture very high margin recurring data revenues. The stock has seen a pretty impressive run leading up these numbers which were needed to justify the current valuation. We won’t have to wait too long to see what Q1 holds in store. I like how BeWhere continues to execute and I’m likely a buyer on any dips below $0.40.
Next week will be a busy week for year end results as we get the last of all the companies with a Dec 31 year end. We are always hopeful that a new company pops onto our watch list as we continue to flip over rocks looking for new gems. To your wealth, Paul and Trevor
*Go Canucks Go! | 
