The attractiveness of a growth stock depends on numerous factors, amongst which
> Its value proposition
> Robustness and Uniqueness of its IP e,g first & best-in breed relative to competition
> Its business model including its revenue model (recurring, stickiness), its geographical footprint and scalability , profit margin consideration and susceptibility to key customers/markets
> Business Traction and uptake
> Its valuation relative to its progress, measured by qualitative and quantitative measures, the latter which I use Market Cap/Revenue
The table below compares several high growth technology-related stocks with similar size market cap.
Several points and observations I wish to make:
1) Personally, I feel that any company that is trading at or above $200m market cap can no longer be selling a "promise" no matter how compelling that promise is. On that point, both BRN and YOJ are trading respectively at $619m and $227m without any material revenues to date hence their Market Cap/Rev at 16k+ times and 276x respectively which is gross overvalued and valuation well in advance of its progress to date. IMO these two companies, to cast my doubts aside, may well have a promising future ahead of them but the market has given too much weight and value well too ahead before the promise is fulfilled, and so they ought to be trading no more than at levels at which e.g 4DS is doing i.e below $100m.
2) The Table also shows that EVS , AIM and AMS are very decently priced stocks with Market cap valuation only between 3.3-5.2x suggesting an excellent upside for these stocks IMO. I did not include LVT as a potential stock to include because like BRN, it burns cash and senior management living the high life at the expense of its shareholders.
3) A possible key reason that has driven stocks like BRN and BTH higher is because of their recent inclusion in the XTX (ASX Technology index) that resulted in ETFs and instos having to buy into those stocks, and of course the volume and price momentum only drew more retail buyers to drive their share prices even higher.
