India

Published on: January 21st, 2018

Raoul recommends a new opportunity that missed out on the global equity rally and it happens to be in one of the hottest markets in the world… India.

Comments

  • sB
    sylvain B.
    1 February 2018 @ 04:01
    Great piece Raoul and thanks for highliting INDIGO. On top of Macro story some short term catalysts could boost the stock. The shares have underperform over last 12m due several issues that are being resolved. First delay in delivery of spare engines by Pratt&Whitney had impacted the company’s capacity addition plans. The issue is progressively being addressed with the induction of 8 NEO planes during Q3FY18. Ram up in delivery of 15% fuel-efficient NEOs will enhance cost competitiveness. Second INDIGO have boost pricing offesting fuel increase. as a result EBITDA beat estimates. competitiveness. So 1&2 offer some protection against increase in oil price. on top Indigo is the only airline with net cash on the BS ($2B). Finally the stock has lot of room to grow with a $7.3B market cap versus $24.5B for Ryanair.
  • CS
    Chuck S.
    22 January 2018 @ 16:01
    Raoul, You say that if the price breaks $38.5 then it is likely to explode. That is 25% over current market. Is there any reason to wait for the break before buying an initial position? Chuck
    • CS
      Chuck S.
      23 January 2018 @ 20:10
      Raoul, Let me rephrase this idiotic question. Other than being the previous high (roughly), why do you see $38.5 as a significant marker for potential explosive growth? The current price is +- 30% above the October low and a move to $38.5 would add another 25% to that. Perhaps not explosive but that would be a pretty substantial move. Chuck
    • RP
      Raoul P. | Founder
      24 January 2018 @ 17:53
      Hi Chuck, yes I would see the break of $38.5 as an acceleration point and the key marker that this is going to be a bigger opportunity than a trade.
  • MD
    Michael D.
    22 January 2018 @ 17:23
    Raoul - Would a stop loss set at just under 29 sound appropriate (i.e. a retrace to the upper trend line)? Best.
    • RP
      Raoul P. | Founder
      22 January 2018 @ 20:18
      Thats really for your own risk tolerance. in this instance as my time horizon is long on this trade so I will size it accordingly.
    • AC
      Andrew C.
      23 January 2018 @ 11:26
      Thanks Raoul; position sizing is still one aspect I am grappling with. One stock, long time horizon, 1% of portfolio? The Indian Country EFT 5% ? The uranium play 5%? I am not after concrete "rules" just some ideas to mull over...
    • TB
      Teresa B.
      23 January 2018 @ 22:30
      Hi Andrew C, I know you are asking Raoul the question, but here is my 2c. There are many factors that go into position sizing and I don’t think there is a one size fits all solution. Some obvious factors include, age, risk tolerance, size of portfolio etc. As an example, if I was 70 years old my % allocation to a stock like this would be a lot less then if I was 35 years old, as I may not have the time for the position to play out. Also, if my portfolio size was $50k vs $5m my % allocation would probably be drastically different. I would be prepared to risk a higher % on my $50k portfolio because it is quite small. Having said this, it really is a personal decision based on your current situation. I have personally risked 1% of my portfolio on this position, but I do have a relatively big portfolio and am relatively young (38). I plan to hold position for 10 yrs+, maybe 20 yrs. Hope that helps. Cheers
    • gg
      gurdeep g.
      24 January 2018 @ 09:26
      Hi Andrew, thought I will pitch in too. I see both MMYT and URA as quite volatile, both have potential to run up 100% in a year or even down 50% or more. So I usually go half a portion size in and add in MMYT case if/when it clears 40 ATH.
  • BK
    Bruce K.
    23 January 2018 @ 18:14
    Mr. Obvious here. With MMYT correcting and the chart looking so-so, averaging into a position (long calls or long equity) seems prudent.
  • JM
    John M.
    22 January 2018 @ 06:24
    Raoul, Rather than options would you also recommend buying the shares?
    • RP
      Raoul P. | Founder
      22 January 2018 @ 10:36
      Yes, that is my preferred investment vehicle.