3Semana
I definitely agree that the company isn't a bad one. I've had it on my watchlist for a long time. However, during my screenings, I always felt it was overvalued, or rather, I saw more attractive opportunities with other companies. Now, though, the stock price is falling, which makes Xylem more interesting to me.
Where do you see its fair value right now, and how do you assess its outlook for the next 3–5 years?
Where do you see its fair value right now, and how do you assess its outlook for the next 3–5 years?
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@KevinE I find it difficult to put a fair value on this. However, I see the water-related business sector as an extremely important and underestimated factor.
You don’t have to look very far to realize that we’ll face even more severe problems with water supply in the coming years. Water management and treatment are therefore extremely important. It hardly matters whether we’re talking about an industrialized country or an agricultural nation—water is needed for almost everything. That’s my fundamental view.
Technically, I see Xylem trading below the 200-week moving average—historically, this is usually a good entry point(?). The only important thing now would be for the stock to find a bottom. However, the latest 5% drop seemed to indicate that the downward momentum is still intensifying.
As always, this is not investment advice… and I’m not an analyst 😅😉
You don’t have to look very far to realize that we’ll face even more severe problems with water supply in the coming years. Water management and treatment are therefore extremely important. It hardly matters whether we’re talking about an industrialized country or an agricultural nation—water is needed for almost everything. That’s my fundamental view.
Technically, I see Xylem trading below the 200-week moving average—historically, this is usually a good entry point(?). The only important thing now would be for the stock to find a bottom. However, the latest 5% drop seemed to indicate that the downward momentum is still intensifying.
As always, this is not investment advice… and I’m not an analyst 😅😉
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3Semana
@FinanzMechaNikk As I said, it’s perfectly clear to me that this is a good company. Strong management, an attractive industry, solid financials.
But the valuation can make even the best company unattractive—or a mediocre one very attractive.
Fundamentally speaking, a Xylem stock at double the current price would simply be far too expensive—either all future growth would already be priced in, or investors would be very—or even too—optimistic (a classic case of “priced to perfection”). Or to put it another way: if a company is valued at a P/E ratio of 100, it’s still too expensive, even if the P/E ratio for 2030 is “only” 60.
In the case of Xylem, however, I also consider the valuation to be reasonable, and it’s a stock worth considering for entry.
But the valuation can make even the best company unattractive—or a mediocre one very attractive.
Fundamentally speaking, a Xylem stock at double the current price would simply be far too expensive—either all future growth would already be priced in, or investors would be very—or even too—optimistic (a classic case of “priced to perfection”). Or to put it another way: if a company is valued at a P/E ratio of 100, it’s still too expensive, even if the P/E ratio for 2030 is “only” 60.
In the case of Xylem, however, I also consider the valuation to be reasonable, and it’s a stock worth considering for entry.
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