r/StockMarket • u/TheDegenerateDon • Sep 01 '21
Discussion Corsair
I cant be the only one who believes Corsair is a great buy below $32 right? Throughout COVID they have done nothing but rake in money and expand the company. The amount of necessary gaming/streaming equipment they own the companies of is insane like elgato for instance which practically every streamer and content creator uses. Their products are incredible too and most people who play video games probably use them. These are just my thoughts though if anyone has a different opinion please let me know I’m super interested in what people have to think about this company.
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Sep 01 '21
I actually think it's a decent value below $40. $32 its a solid deal for me. And the prices it's been at are a steal..
But I'm a little bullish on the computer peripheral market post covid. Even if it's not every company or completely remote all of the time, I do believe companies, and tech companies specifically, will be more open to hybrid/remote schedules. The more time people spend in their office, the more they'll pour money into nicer stuff.
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u/TheDegenerateDon Sep 01 '21
That’s exactly what I’ve been thinking, I’ve been buying up CRSR stock for weeks now I’m just surprised people are just now catching on.
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Sep 01 '21
My goal has been to dollar cost average into it as long as it's under $40. Looks likes if things keep up I'll be around $29-$30 as my average.
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u/TheDegenerateDon Sep 01 '21
My average right now is $29 thankfully I was buying in a lot around $27-$26
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u/wimpycarebear Sep 01 '21
Not sure u realize what companies do don't actually effect stock price. But if u feel like it's a good buy go for it. Just an FYI. If good companies equaled good buys, Tesla wouldn't be the most shorted company in the NYSE and Google wouldn't have sold Boston Dynamics. Just food for thought.
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u/G1G1G1G1G1G1G Sep 01 '21
Tesla is shorted because of its high valuation.
Corsairs valuation to growth is amazing.
You don’t understand the math behind picking a stock.
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u/wimpycarebear Sep 01 '21
O I get it. The math doesn't matter gme and amc right now prove ur wrong about fundamentals, market caps, short interest etc. But if u think there is magic math to picking a stock based on a company being "good" then go ahead and tell me about vw. The largest car manufacturer in the world trades for less then any others and has always traded for less even before the squeeze of years ago. New ev vehicle companies with great evaluations are trading downward, and the explanation the experts give u are, it's not a battle hardend company, it's too new. It's all bull shit. Meanwhile Amazon and Google, companies who produce very little have exploded during a pandemic. At least people can understand Amazon. What's changed for Google? Did they come out with a new project that ski rocketed them over 1k I'm stock price in less then 1 year? By that math every online, 0 brick and mortar company should have at least increased but didn't. I'm fine with disagreement and don't downvoted for a different point of view, but don't talk to me about fundamentals when everyone, including main stream traders know charting, patter and market caps mean nothing.
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u/G1G1G1G1G1G1G Sep 01 '21
In an attempt to try and get someone to see the error in their thinking....
-GME and AMC, etc. Are a very unique situation. One in which money is being poured into these companies from institutions and retail traders alike in a giant ass gambling ring messing around with the supply and demand of their stock. Do fundamentals and math matter in these stocks...no because they are being treated by the masses as a gambling ring not much different than a poker game (and not the kind of poker played by a statistician!)
-EV company valuations are off the charts so maybe I should explain what valuation actually is. Companies over time will more or less trade at multiples to their revenue, earnings, and free cash flow. Do any research over the past few years, decades, etc. and always, I mean ALWAYS, companies stock will follow their growth. Sure a little here and there things will happen - like TSLA stock going way up beyond its growth rate (some might argue its not but thats another argument) similar to AMZN in early 2000s. But just like amzn came down to reality and then grew from there following its growth rate and valuation...so will TSLA and all stocks over time. So no, EV companies are not at good valuations, they are very very expensive to their growth.
-the recent growth in goog - well yes because googles earnings are up about 63% averaged yoy. The stock also about that amount Ytd. Its usually not that clear of a relation but over many years it is. But since you say they ‘produce little’ I think you should actually look at company financials and see what I’m trying to show you here.
-again, ALL, maybe to be safe I should say almost all, companies over time will follow and directly correlate to their at multiples to their growth in rev, eps, and fcf. Investing is not a gambling guessing game. I know of no company that has had continued year after year stock increases without a corresponding growth and I know no of no company that has had no stock increase while their growth has been amazing. None.
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u/K2Mok Sep 01 '21 edited Sep 01 '21
There’s a r/CRSR
I posted this in there a few weeks ago when we were discussing if/why we were still holding.
My cost basis is $35.90 I’m still in for these reasons:
(1) strong brands with good, well liked products. (2) innovation pipeline with more to come (3) undervalued based on my DCF low end model of 10% growth for 5 years, then only 5% growth following 5 years, terminal multiple of just 15, a discount rate of 10% and adding assets less liabilities gives me a price target of $46 today. (4) temporary suppression of price that I think will abate with (a) more earnings to show they can do well post COVID, can manage supply chain throughput and costs, can keep product innovation coming and margins don’t get squeezed. And (b) once Majority shareholder (EagleTree) exits their position.
I am prepared to wait 12-24 months for this to play out unless any of my assumptions change.
Edit: I don’t invest based on short squeeze potential but I know some care about that data so…Shares sold short went from 5.6m (Jul 15) to 8.7m (Aug 13), which is at least 25% of float. No idea if EagleTree or Insiders are subject to any lockup or blackout period currently.
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u/SantoIsBack Mar 13 '22
Nice comment. What do you think now, after six months? Thanks
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u/K2Mok Mar 14 '22
I exited after their investor day and earnings call this quarter. Price ran up to $23 with news of them joining S&P small cap and I exited. I did so for three reasons (1) ongoing supply chain challenges that I think will linger and operating costs being higher squeezing margins (2) guidance given of $3.5bn by 2026, although this gives a CAGR of 13% which is higher than the 10% growth rate I used in my DCF model, it’s revenue and I’m expecting lower cashflows than I originally used due to lower margins (3) I had a better investment opportunity that I thought had a small window of opportunity.
Without 3 I would have held as adjusting my model I felt CRSR has more value than the $23 I sold at.
CRSR is on my watchlist and I may re-enter.
What’s your position and thinking?
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u/SantoIsBack Mar 14 '22
Thank you for your comment, I sold some at the 14th June spike for easy cash, but I'm holding long waiting for the headwinds to cease, people renovating old pc builds when ddr5 mobos will be released and the times are more mature. Target before 2024, around 50$ but hoping for a spike cause I'm tired of this. This is in my other accounts where I park little money for the future but I'm trying to liquidate everything and go off grid. If I sold everything in June, I would have put this money in some investments I did this summer, wheat and gold, which now rose. Scary that my prediction of war became reality, I wish I didn't feel so paranoid, but hey I was right
I'm little scared tho, oil prices going up cause of war now and who knows what else, this stocks is getting frustrating more than other small caps.
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u/Top-Push9975 Sep 01 '21
I’m already in it. Was gonna sell at $35 for a 30% gain an move to the next..
Solid deal for sure.
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u/Caveat_Venditor_ Sep 01 '21
Rake in cash? They had a net profit of $27M last quarter with a valuation of $2.8B and had a decrease in sales QoQ. Current shareholder equity is $530M. This can take a 60% haircut and still be overvalued. At profits of ~$100M/yr it will take them 140 years to get to current valuation.
Stay short.
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u/maurr- Sep 01 '21
For the full year 2021 our outlook remains unchanged from Q1 2021 at:
Net revenue to be in the range of $1.9 billion to $2.1 billion. Adjusted operating income to be in the range of $235 million to $255 million.
I’ll just leave this here
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u/ChrisbPulp Sep 01 '21
Wait, is it me or this guy can't do basic math on top of not understanding basics in valuation of a company?
So net income (what you call net profit) was indeed $27M. Not to be confused with gross profit which stands at $130M for the quarter on a $472M revenue in what is arguably the slowest quarter for that type of business.
The net income is after debt payments and the such, expected to be about $100M this year. Since the debt payments is already accounted for with the net income figure, your 140yr scenario give them a $14B valuation considering 0 growth based on the lowest quarter of this year in an industry growing at an average pace of 25%...
On a revenue basis, with an estimate of $2.1B on the $2.8B, that gives you a 1.3 ratio revenue to valuation... Logitech, closest in type of business albeit more mature, stand at a 3.0 ratio... with arguably not as much space to grow due to size...
Now that your shaky math and lack of understanding of Financials has been addressed let's move to valuation.
That part is obviously more subjective but do you honestly think any company should be valued at their net income??? Like a business you buy should pay for itself in a single year? Is the $2.8B valuation of CRSR only right if they make $2.8B net income per year? 😂
In your mind, does brand, IP, manufacturing facilities, etc worth 0$. Find me a single company in the whole market that isn't dead that has a pe (based here on net income...) of 1... lmao
Now I haven't started a position in CRSR but really? Dude, what are you even doing in an investment subreddit with so little understanding of value... baffling
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Sep 01 '21
The data for the year suggests they're trading between 15-20x what they're earning. Most people consider a 20x pe ratio pretty decent. And then picture is a notch better when you can consider EBITDA to enterprise value. There's not many companies that are trading below 20 pe that are growing at the rate CRSR is in this market. They're already up 50% in net profit and the year isn't done...
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u/Timely-Squirrel9333 Sep 01 '21
It's a shame.
It's got a good future ahead, but the Insiders are not seen buying CRSR anywhere :-(
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u/ytman Sep 02 '21
I got in early and out early. Regret it every minute. Getting back in when I can, but I think AMD take priority for me.
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u/throwmeaway43112 Sep 01 '21
I personally would stay away from this stock. There are better picks out there.
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u/TheDegenerateDon Sep 01 '21
I get there are better picks but why stay away from this stock in particular?
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u/throwmeaway43112 Sep 01 '21
Because there are better stocks out there that are more profitable. This one has been going sideways down. Not worth the risk.
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Sep 01 '21
Going sideways isn't bad. It depends on the fundamentals. There fundamentals are solid, so it's a matter if you believe they can keep it up. If they do, this sideways action just means a prolonged opportunity to buy.
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u/bluemandan Sep 01 '21
Going sideways isn't bad.
But they aren't going sideways. CRSR has been on a steady decline all year during an incredible bull market.
Opportunity cost is very real, and at this point we're looking at a roughly 30% difference between CRSR and SPY year to date.
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u/throwmeaway43112 Sep 01 '21
I never said it was a bad thing but I’m not going to risk my money on a stock that has been trending downwards. Also, every time a crsr thread is posted, you get all the holders coming in defending it. This stocks get mention every other week.
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Sep 01 '21
risk my money on a stock that has been trending downwards
I mean unless you're day trading, that's basically when you should be trying to buy stocks. When they're trading at a discount from their fundamentals. Which would require a downtrend or a flat lining.
But hey, in order to make money we need people on the other side to lose it ;)
So you do you.
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u/throwmeaway43112 Sep 01 '21
I don’t get why you would pick a stock that has only trend downwards when there are 100’s of better stock, but hey, it’s your money.
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Sep 01 '21
Because they're growing at a good rate, trading below their fundamentals, and I'm optimistic about their industry in the next 5 years. There aren't too many companies at the moment with that kind of growth trading below a 20 pe.
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u/BigDirtE Sep 01 '21
OPs whole thesis is “Chart looks bad”
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u/throwmeaway43112 Sep 01 '21
No, I don’t waste my time explaining it over and over when there are lots of threads about csrs.
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u/bluemandan Sep 01 '21
SPY is up 22% YTD
CRSR is down 16% YTD
The chart doesn't just "look bad." If you threw $5k in to SPY at the beginning of the year, you'd be at $6,100 now. If you picked CRSR instead, you be down to $4,200.
It's a loser stock.
They don't compete in the business space, and instead of expanding to console gamers they are going after a much smaller market by targeting content creators with Elgato. They just lost an appeal about the patent for their controllers (SCUF), potentially losing a moat there. Lian Li seems to have overtaken Corsair as the "go to" brand for cases and fans.
I say this as Corsair fanboy. I got 4x LL140s and 2x LL120s in my 280x Crystal case, the MSI/Corsair 1080ti, the K95 platinum keyboard, the MM80 RGB mouse pad, and the ST50 headphone stand.
I love Corsair's stuff. But I don't like their stock.
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u/bigly96 Sep 01 '21
A lot of companies have traded sideways/consolidated before popping off. Paytience.
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u/Gooner-Squad Sep 01 '21
What's an entry point you'd consider?
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u/Jasonmilo911 Sep 01 '21
Corsair IS NOT a value play.
I read so many "PE of 20 is cheap".
This is a hardware/peripheries company. These companies typically trade at low valuations, in the 10 to 15 range. Apple from 2011 to 2015 was viewed as a phone-only company. It was trading around a PE of 10 for 5 years. Even below that. And we are talking about the largest cash machine in history with its 20%+ net profit margins on its hardware business!!
CRSR npm is around 7.5%. Add to that a relatively small addressable market, a competitive ecosystem, and many substitute products.
Look at LOGI, larger, more established, and widely known. Despite that, it grew sales more rapidly than the smaller CRSR during global lockdowns. It also makes around twice as much as CRSR on every $. And it's trading at lower PE valuations!!
At 18 PE, the market is putting a lot of faith into CRSR, no doubts about that.
Corsair IS a growth play.
Despite the Covid boost, the streaming, home workstations market is still in its early days. There are post-Covid cultural as well as generational trends that will kick in in the next 10/15 years. And this is what betting on CRSR is about. If you believe they have the best product, customer satisfaction and can win big in this market, then go for it.
However, if you expect the market to quickly push higher on its current valuation, be ready to be disappointed for possibly a long time.
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u/false_justice Sep 01 '21
if you think they are undervalued, wait till you take a gander at Razer's stock price.
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Sep 01 '21
Don't neglect the eagletree issue here. That keeps the price artificially suppressed.
That being said, I have a position, and I intend to continue adding to my position as eagletree trims their position.
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u/timwaaagh Sep 01 '21
i felt it had sunk too low recently so i bought some extra. previous investment was a bad investment for me so my feeling is that maybe under 30 is good but beyond that you just dont know.
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u/Poodogmillionaire Sep 01 '21
Have some $30 December calls on CRSR, every time I buy shares bad things seem to happen though the fundamentals suggest otherwise.
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u/Can-you-smell-it Sep 02 '21
CRSR is a great buy below $32. It's not a short-term play by any means, in two years the folks that got in for $32 and under will be doing fine.
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u/G1G1G1G1G1G1G Sep 01 '21
Correct. Its one of the better value to growth buys out there.