Hi,
Objective of starting this thread is to find out companies where possibilities of CAGR returns in share price is much higher than sales growth.
Most of the companies where sales growth guidance is 20%+, have already run up and margin of safety is not there. There is already a thread for such companies: Companies with 20%+ growth guidance for next few years.
What I am trying to find out is companies where sales growth maybe negligible or in single digit, but EPS growth can be north of 20%+ and available at cheaper valuations. Companies mentioned in my starting posts are those where EPS growth will be faster than topline growth but their guidance is also on the higher side only.
There are some companies which are cyclical/turnarounds where sales growth may not be much but due to margin expansion EPS can grow very fast and that could lead to rerating. Here is one example:
Sportking India: Margins seems to be bottomed out, some improvement seen in last quarterly results. They have done peak margins of 30%. If margins go back to even 20%+, EBIDTA can almost triple even if sales are flattish. Also if they reduce debt, then it will significantly improve PAT. This company is highly cyclical, we have to keep allocation in check. Discl: Invested.
Any views are welcome, I am still in learning stage only and trying to figure out the investing world. 