Net Ease has a PEG Ratio of 0.6085 making this Chinese video game maker an affordable growth company.
I like video game space in general. I’ve been a holder of Activision (ATVI:NASDAQ) for three years and in that time it’s appreciated over 300%.
I bought it when everyone was saying traditional video game makers were going to lose out to mobile games. Glad I ignored everyone’s negative sentiment and bought it.
I feel the same with Net Ease (NTES:NSDAQ). This company has a lot of negative sentiment around it. It’s got good titles that people are buying. I’m a long term investor so I don’t mind the negative sentiment.
I found this great video interview with value investor Joel Greenblatt. I agree with his assessment on pretty much everything in this video. Greenblatt says, “High earnings yield now, means there are low expectations for the future. Those are precisely the stocks that institutional managers, who are worried about doing well in the next year or two, systematically avoid.”
I’ve definitely come around to this assessment. Open Text (OTEX:TSE) (OTEX:NASDAQ) is a recent example of high earnings yield.
Why didn’t I buy this stock 2 years ago when it came onto radar. I have a screener that looks for companies that are growing and show some value… as is the way with Peter Lynch’s PEG ratio.
Also, Stamps.com (NASDAQ:STMP) made my watch list because it made a lot of sense to me. There is a trend in individuals who are selling their products online through sites like ETSY. This company helps those people by making allowing them to print postage from their homes and home offices. I know people who actually use Stamps.com and are highly successful business owners.
As Peter Lynch would say, your own experience counts as valuable research that Wall Street professionals don’t have. I missed out on buying this stock two years ago but I might still buy in at this price. I’ll have to do a little research first.