Just recently, the market has entered the interim report disclosure period . Some research reports and news frequently appear in "Davis double-click" , such as "a industry is ushering in Davis double-click for performance and valuation" and "a company is expected to usher in Davis double-click".
So Xiaoxia will give you some popular science today, What is "Davis double-click" ? and what does the corresponding "Davis double kill" mean ? What reference significance does these two phenomena have for our investment?
01
"Davis double click" and "Davis double kill"
"Davis double click" by well-known investor Serbi Kelun •Davis proposed that the investment principle of "Davis double-click" can be simply understood as "You can have both fish and bear's paw" - first buy stocks with growth potential at a lower price-to-earnings ratio, wait for the market to warm up, and sell at a high price-to-earnings ratio in the bull market, so that you can get double benefits of the simultaneous growth of earnings per share and price-to-earnings ratio, that is, "double-click" of performance and price-to-earnings ratio.
For example, we know that the stock price of a listed company = price-to-earnings ratio * Earnings per share , so it is not difficult to find that the factors that cause changes in the stock price of are the changes in the price-to-earnings ratio valuation and earnings per share . Assuming that Company A's earnings per share in 2021 is 1 yuan and the price-to-earnings ratio is 10 times, then the stock price is 1 yuan*10=10 yuan. By 2022, Company A's earnings per share doubled to 2 yuan, investors are also optimistic about this company, which stimulated the valuation of to rise , and the price-to-earnings ratio reaches 20 times. Then Company A's stock price is 2, yuan*20=40 yuan, and the stock price has risen 300% compared with last year. The product amplification effect of both the performance and price-to-earnings ratio of is "Davis double-click" .
The opposite of "Davis Double Click" is "Davis Double Kill" - it can also be simply understood as "Both fish and bear's paws are not available" , causing multiple losses. "Davis double kill" means that when a company's performance declines, earnings per share decreases or decreases, and the valuation given by the market also decreases, because the two declines at the same time, causing the stock price to fall rapidly by multiplying multiples . Xiao Xia will give you an example: Suppose Company B's performance has been in a high growth state in the past few years, and its earnings per share will be 2 yuan in 2021. Since investors with good performance have also given the company a high valuation and a price-to-earnings ratio of 50 times, the company's market value is 2 yuan * 50 = 100 yuan. However, in 2022, Company B is not doing well and earnings per share fell to 1 yuan, and investors were disappointed and sold stocks one after another, causing the stock price to fall. Assuming the price-to-earnings ratio fell to 25 times, the company's stock price became 1 yuan * 25=25 yuan, a 75% shrinkage compared with the previous year. The product effect of the simultaneous reduction of 's price-to-earnings ratio and performance is "Davis double kill" .
02
How to seize the investment opportunity of "Davis double-click"?
After understanding the principles of "Davis Double Click" and "Davis Double Kill", I believe everyone will know that investing in stocks actually makes two parts of money, one is the money that has increased valuation , and the other is the money that has increased performance and earnings per share . Therefore, when we judge whether a company has investment value, we must first look at the valuation level, and secondly, we must look at whether the company has high growth potential. Those companies with relatively low valuations and high performance and sustainable growth are more worth investing in.
So in investment, how can we seize the opportunity of wealth multiplication brought by "Davis double click"? How to avoid the risk of "Davis double kill"?
First, insists on value investment . A smart friend must have discovered that to seize the opportunity of "Davis double-click", it ultimately means that must practice the concept of value investment , that is, buys a good company at an undervalued price.It is difficult for "good companies with high valuations" or "companies with cheap valuations but moderate performance" to have the opportunity to "Davis double-click".
Second, must hold for a long time. The growth of listed companies' performance needs time to be realized, and "Davis double-click" also needs time to verify. Therefore, we must patiently hold those good stocks and good funds with potential in order to have more opportunities to share the "Davis double-click" effect brought by performance growth and price-to-earnings ratio growth.
3, seizes the opportunity of low-level layout . It requires a high professional threshold to explore good companies. Many times, when a good company is discovered, it is usually when the market has already paid a certain level of attention. At this time, the price-to-earnings ratio of good companies is no longer low. Then will ordinary investors have no chance? In fact, this is not the case. The market fluctuates and fluctuates, and good industries and good companies will also experience phased pullbacks. If you are sure of the future development potential of the industry and the company, you might as well plan at a low level when the pullback is back, and strive to share the multiplier income of the increase in the price-to-earnings ratio and the company's performance rise.
(Data source: Wind, 2022.07.27)
03
In the interim report season, looking for opportunities for "Davis double-click"
Back to the present, A-shares have entered the interim report disclosure period, everyone might as well follow the principle of "Davis double-click" to find opportunities. According to statistics, as of July 26, a total of 1,776 companies in A-shares reported interim results, of which 745 companies expected positive performance (including four situations: expected increase, continued profit, turnover of losses and slight increase), accounting for about 42.19%. From the perspective of industry distribution, individual stocks in industries such as mechanical equipment , electronic , chemical , biomedical and other industries performed well, and the performance of new energy industry chain continued to grow at a high rate. In terms of sectors, the Science and Technology Innovation Board, which has just reached its third anniversary, still performs quite eye-catching, with high growth attributes highlighted. Taking all the considerations, energy, materials, semiconductor and semiconductor production equipment, technical hardware and equipment industries are more likely to have "Davis double-click" .
(Data source: Founder Securities, 2022.07.17)
According to the institutional viewpoint, the current market has entered a critical time window. The industry with continuous high prosperity in the semi-annual report and turning points are the most important configuration clues. recommends configuring around the three main lines of growth manufacturing, medicine and consumption balance. (Data source: wind; Economic Reference News, 2022.07.27; Shenzhen Business News, 2022.07.26; Founder Securities, 2022.07.17; Full text reference: Tianfeng Securities, 2022.07.02; CITIC Securities, 2022.07.10; China Securities Journal, 2022.07.10; Economic Reference News, 2022.07.13)
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