r/valueinvesting
Why you wait for fundamentals to turn on broken growth stocks
Avoid catching falling knives in broken growth stocks like FISV, PYPL, and NVO; wait for fundamental turns before investing.
- Fundamentals of former high-growth franchises like FISV and PYPL are actively degrading.
- NVO is facing unexpected negative revenue growth and a collapsing 2025 outlook despite looking cheap.
- Catching these falling knives leads to severe losses; investors must wait for clear fundamental turn signals.
One of the great financial tech franchises - $FISV - getting murdered over and over again as we watch. When weakness in the fundamentals drives a stock down, do not invest until the fundamental turn.
PYPL fundamentals are also degrading. You have to wait for a sign of the turn.
NVO looks cheap but NO ONE thought it would post negative revenue growth in this year back in 2023/24. People would have laughed if you said that. The market knew 2025 revenue growth was going to collapse. And now it is getting worse. Wait for the number to turn.
Yes, you might miss a 20% pop but it is worth it to miss the FISV "collapsing ladder" as some used to call it. I liked to call it "shiza down the leg".
Microsoft is fine, but i will wait 6 to 12 months for INTU
I believe you feel that way because you’re speculating on stock prices - you want to make a profit on the difference.
This sub is more around buying brilliant companies at a fair price - with NVO for eg, I bought it at $50, and then lots at $40. I don’t care if the price is at $20 tomorrow as I’m not leveraged. I fully accept that it could be at $20 tomorrow - and I would be the happiest person here because I have liquidity that will allow me to buy even more at $20.
I see the stock price as the price I would have to pay to buy a small fraction of Novo - because like you said, it’s such a brilliant company that no one ever thought it would come down to this price. It’s like when you go shopping and you see your favourite box of cookies at 80% off this week while I bought them at 50% off last week - I’m not going to be pissed - I would thank my stars and stock up on as many as I can consume before their expiry dates.
It would be amazing if the stock is worth $300 tomorrow, but I’m perfectly happy with it staying at this level as long as it’s compounding.
I don't feel this way about nvo. But I respect the conviction, replace nvo with pypl and we are the same.
In PayPals case, even when it dips and I don't do anything, I get the benefit of increased share buybacks for their same dollar.
Had similar comments on the stocks I bought previously - NVDA before the boom, UNH last year, SAN a year ago, INSW a year ago - see my post/comment history. I have the same conviction on NVO I had on these stocks then, because I’ve done the same amount of painstaking research on NVO as I did for those
Is there a short answer you care to share? Bc straight dcf for nvo doesn't justify today's price, much less a pessimistic scenario (for lly too) where it becomes a price war for glp1s.
I believe glp1s are one of the biggest changes in society right now... Doesn't mean the players are destined to benefit as much as hyped
BSX for me
As resident PayPal fanboy... I will un akshually here....
PayPal in its history of existence... Has never had a yoy decline in revenue (unlike those shit companies like tsm and meta who have).
Problem with PayPal is the tick rate . It keeps going down every quarter.
You're talking about 1.72 2 years ago to 1.62 now. The tpv is increasing far faster than the 6 percent decrease, so margin keeps rising modestly while share count is dropping at current rate, 15 percent annually.
I'd sure as hell would like to be the final shareholder owning this ever more modest business in its entirety in 6 years. I doubt that's gonna happen, because some player with crazy capital will buy this gem out but I won't cry with a triple.
Don't recall PayPal reaching 200b in revenue with 50% core operating margins and growing 30% though (or swap the numbers as 130b and 60% operating margins for TSM)
Obviously I'm being facetious but it is a fun fact that many amazing, even amazing er than PayPal, companies have had revenue declines ever... And never "most shat on stock in history" PayPal.