ASX Shares 10 bagger

Hi all,

I have really enjoyed this post and would like to do some research of my own (although I like the idea of being able to blame someone else if the stocks don't perform lol). Can anyone give me some tips about how/what to research when looking at individual stocks to invest in. I am open to any form of help, weather that be books I should read, analysts I should follow or explaining some charts and why they show bullish or bearish signs.

Thanks,
Nick

 

The Black Swan: The Impact of the Highly Improbable - Wikipedia

Irrational Exuberance (book) - Wikipedia

How to Start with No Savings and Get Rich Safely by Moore Stuart - AbeBooks

I still have the priceless copy of the last on the list by Stuart Moore that he signed for me in the early 1990's..quote..
Stuart Moore..
The investment philosophy that is in the focus of this book takes the middle ground,utilising the benefits available from each course of action while minimising the disadvantages and the risk.
good luck.

 

Hey guys, have a few i have invested in and some just watching but i think all have potential to 10bag
EOS - already multibagged recently but i feel still has a very bright future
ALC - after visiting a queensland health hospital today and spending 2hrs with a midwfie filling in paperwork there is a huge potential for this company (credit goes to @Fargo for finding this beauty)
AKP - complex technology with huge scope if they can get it right on the commercialisation side
FGR - amazing potential once industry wakes up to what graphene can do

DYOR

 

EOS - just doubled down more at $6.75 today.Was in from $5.20
FGR - bargain bottom price - I got in a few months ago at $0.24
PBH - I think these guys have the right team to execute on a great business

 

What's the key point of difference for ALC?

 

Hey mate can you tell me a bit about PBH? Cheers.

I recently took a position in A4N as well. Worth a look if you get time

 

I believe they have a superior product, contacts in the UK (NHS) and already have contracts.

 

Though I knew its potential I never invested in EOS on ethiical grounds dont like armaments but that was before I understood its potential for defending against swarms of drones and also saving lives.. ALC is kicking goals winning contracts getting positive feed back has a long runway . Improving efficiency saving money and lives. An action plan made by AI software relayed to nurses/ careers by smart phone making and prioritizing decisions means more time doing and less time interpretring data and more correct decisions especially by inexperienced staff. Here is one reason. Safer hospitals could save $1.5 billion a year but “existing IT systems don’t do enough”

 

Do you think BUB has disappointed people?

 

Hi @Fargo could you please copy and paste relevant info as that link didnt work on my computer?

Thanks

 

I cant get the link to work now either, The point I was trying to make was is to ignore the noise, and focus on the metrics and WHAT IS. The page showed the CAC( customer Aquisition Cost) To boil it down and cut to the chase. Every $ reinvested is giving gives $8.50 LTV (Life Time value) normaly 3x . The retention rate is 115% after accounting for 12% churn. indicating customers that stay are spending 15% more each year, Some of the other box ticking metrics are @ 7.40 min of the video, 94% of revenue is recurring, 63% GM, relatively good but not brilliant for SaaS. Founder has skin in the game 15%. ASX Announcement: Revenue and EBITDA out-performs in FY19

 

Gentlemen, A4N starting to finally move. Still expecting some more positive news this side of xmas and hoping it can push into the 20s from here now. Definitely a potential 10bagger should the ducks align over the next 18-24mths. DYOR

 

On that topic, ADN also worth a look. IRR currently 174% and I expect it to push well above 200% with the new feasibility study due by end of H1 2020. Very low startup CAPEX and very short payback period. Resource upgrade and other news flow expected before the end of the year. 10 to 20 bagger from current levels with much further upside beyond this.

If you like Biotechs take a look at RAC. Bringing back a forgotten cancer drug from the 80's and 90's.

New Chief Scientific Officer bought a big stake as an independent private investor ... then joined the company.

( watch the AGM video but pay particular attention to the part from 10:00 in this video )



DYOR.

 

SPL has had good results from its phase 1 trials on safety tolerability and efficacy with 67% of patients showing prolonged disease and biomarker reduction on a range of cancers. Worth a small position and could 10 bag. WSP is another with good characteristics and potential for multibagging, saas model, founder led who has 15% stake,customer retention rates 88%, revenue retentions rate over 115% and 94% of revenue from recurring subscriptions and charges which are mostly from IBM and Telstra partnership, while their is risk of losing a little money with companies like this I think their is a much larger risk in missing out on real wealth building by not taking a small position.

 

I wrote a bit about it on post#61 on this thread I will try to get some more up to date info from the latest report latter.

 

For anyone investing in Biotechs it is worth looking at them in the context of probabilities of successfully progressing through each trial phase.

References:
[1] https://aspe.hhs.gov/system/files/pdf/76891/rpt_antibacterials.pdf

We need to take a look at the drug development life cycle:



You can see in the diagram ( extract from [1] ) that development of new treatments has multiple stages with a binary outcome. These binary outcomes at each stage (i.e. success or failure) create the significant investment risk in biotechs. It is therefore helpful to try assess the probability of transitioning through all the development stages.

There are 4 stages or gates in the diagram above where the treatment can fail to achieve success.

Two strategy goals are a primary focus (and potential outcome) for junior Biotechs:

1. Development of a new treatment to the point where it can be approved for treatment and hence generating sales revenue ( this will typically require progression through all 3 Phases, however there are some accelerated pathways for drugs to be approved following Phase 2 trials ).
2. Development of a new treatment to sufficient clinical maturity to entice a potential takeover ( this will depend on how much early promise is shown by trials, takeovers can occur during Phase 1, Phase 2 or Phase 3 but they will typically occur in Phase 2 or Phase 3 once their is sufficient confidence in the potential success of the treatment ).

So we need to look at the probability of successfully progressing through the phases required to achieve a desirable investment outcome. For example from progression from Phase 1 and Phase 2 to takeover or to new drug application and sales.

Development Phase Transition Probabilities

From [1] I sourced some data that gives us some probabilities for treatments progressing between each development stage in the treatment development lifecycle. Data is generalised. Probabilities for treatments being developed by individual biotechs may vary.



For example, the generalised probability of a treatment completing the Pre-clinical stage is 35.2% noting the lower bound given of just 17.5%. That means failure at the pre-clinical stage is much, much more likely than success.

I've annotated the lifecycle diagram to show the probabilities for each stage.




So how do we determine the probability of a treatment going all the way from the pre-clinical stage to an approved and in-market product?

We can do that by multiplying the probabilities. So the chance of a treatment going all the way from pre-clinical stage through to an approved an in-market product is generalised by my calculations here as just 3.3%!

I have shown below also that we can in general terms reduce risk (i.e. improve probability for our investment) by investing in later-stages of clinical development. So in this example the combined probability of clinical success from investing in a Phase 3 product is 57%. The odds are now in generalised terms in our favour. All other factors aside, success is more likely than failure.

Note - probabilities below are generalised around clinical / approval risk ( no other factors associated with investment risk such as dilution or management capability or product economics are considered )



Be very cautious with Biotechs at the very early stages. Read the following for why:

Of mice and men: why animal trial results don’t always translate to humans

If you invest in Biotechs what you should do is continually assess and reassess any factors that reduce your risk at any stage. You can do this by:

• Reading between the lines on announcements ( e.g. is a poor outcome in a trial being obscured through vague reporting or lack of detail )
• Reviewing trial results in the context of endpoints identified for the study ( looking at the original declared endpoints or study goals and try to assess if interim results point to endpoints being achieved when the trial concludes )
• Success in recruiting medical centres and patients to trials
• Calibre of the board and other key positions ( in particular from medical, science and industry perspectives ). Particularly look at their experience.
• Results from previous or completed trials and how this might reduce risk

You should also familiarise yourself with the Code of Practice for reporting by Biotechs.

https://www.asx.com.au/documents/re...e_for_Reporting_by_Life_Science_Companies.pdf

Unfortunately for us though it is weak as the collection of definitions need work and from observation it is poorly or inconsistently enforced. There is also a general problem that some Biotechs make too liberal use of terminology for PR purposes ( in the worst cases making poor outcomes look like great outcomes and this misleads investors ).

 

Hey @Fargo curious on your thoughts on Whisper. I think you referenced it on another thread.

Do you think it will get to breakeven as planned or need another capital raise?

More conviction for ALC?

 

Hi Wombat 777,
Thanks for posting this and I see you got a mention in the video. Perhaps you have been at least partly responsible for the recent spike in the share price!
You detailed analysis makes a lot of sense and RAC also interests me as I lost a good friend to AML.

I would be interested in your opinion of Mesoblast which I currently hold. They have long term appeal but definitive results seem to always be pushed out into the future and in the mean time MSB is the plaything of day traders and shorters.

 

With spec stocks I try to look out on a 3 to 5 year horizon, hence the analysis of RAC. I do think it is the new strategy driving the turn-around. Their new CSO ( who originally came in as a private cornerstone investor ) is a driving force as he bought in a fresh perspective backing up the better industry perspective that the director Dr John Cullity gives them ( who has significant big pharma experience and connections ). Their new appointment to the Clinical Advisory Board is quite important for executing the new strategy as it gives them experience for trials design and strong connections to cancer centres ( key for recruiting patients to trials ).

I haven't looked into MSB so can't share any insights. Have you considered using the ASX reporting guidelines as a basis for asking your own questions of management?

https://www.asx.com.au/documents/re...e_for_Reporting_by_Life_Science_Companies.pdf