Currently results of most of industry players are at inflated stage.
With rise in commodity prices, end user prices of almost all the goods have been increased. Few products have even seen 25+% price growth compared to last year.
With rise in commodity prices, end user prices of almost all the goods have been increased. Few products have even seen 25+% price growth compared to last year.
This is inflating the absolute sales figures. While only few company in each industry is able to maintain their margins than that of previous year.
However, these sales are driven by demand of current years and that of last year as well (covid demand).
However, these sales are driven by demand of current years and that of last year as well (covid demand).
Currently most of the companies are reporting higher sales figure, which is mainly driven by increasing price (i.e. inflation) rather than absolute quantity growth.
Globally, we are surely going to see good amount of inflation in coming few years.
We are standing in the bull market, not only because of exceptional growth potential, but also because of inflationary scenario going in the end products.
We are standing in the bull market, not only because of exceptional growth potential, but also because of inflationary scenario going in the end products.
Analyst expectation on most of the stocks has also been increased multi-fold (leading increase in Price Multiple).
But question remains, how long this will sustain?
On the mid term basis, demand may stabilize and the price of most of the product will also stabilize.
But question remains, how long this will sustain?
On the mid term basis, demand may stabilize and the price of most of the product will also stabilize.
This will lead to normalcy in growth in the market.
As an investor, we now have to closely focus on the price.
The future growth of the company is driven by Price & Quantity growth. However as these prices get stabilize Price Growth will not be seen.
As an investor, we now have to closely focus on the price.
The future growth of the company is driven by Price & Quantity growth. However as these prices get stabilize Price Growth will not be seen.
Hence growth driver will only remain quantity growth which will grow at moderate level only.
Considering these scenarios we must better see the Price Multiple we are paying to the stocks, when all these commodity prices gets stabilize.
/End
Considering these scenarios we must better see the Price Multiple we are paying to the stocks, when all these commodity prices gets stabilize.
/End
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