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A FREE Idea of the Week - Not Members Only! (Cestrian Stocks Bulletin #84)

Cestrian Stocks Bulletin
A FREE Idea of the Week - Not Members Only! (Cestrian Stocks Bulletin #84)
By Cestrian Capital Research, Inc • Issue #84 • View online
Dare you trust the chart?

DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security, or financial instrument referenced in this note. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note’s date of publication and are subject to change without notice. Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. Cestrian Capital Research, Inc. values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications.
Is It The Big One This Time?
This week’s Idea of the Week, is, buy $TWLO and hold until the stock reaches the $600s/share. Lest you think us nuts, since as we write the Nasdaq is about to hit the deck in the light of Apple and Amazon earnings snafus, read on.
OK, so, with this quarter’s print, TWLO is posing the question: is tech about to finally swan-dive, crushed under the weight of inflation, Fed tapering on the horizon, and everyone just-about-had-enough-of-stupid-lossmaking-companies-being-so-expensive ? Are we to dust off the CAPM textbooks and starting doing DCF valuations of railroad companies to eke out a meager living once more? Buy muni bonds and be happy with a couple points of yield? Or is tech about to make a HUGE MOVE to the upside?
Well, we can’t be sure, of course. But if you own TWLO, or you’re thinking of doing so, you need to form a view. Because what just happened was, the company printed a great quarter, and the market vomited on the stock.
So, either, this is time to start harvesting your gains in tech, realizing cash, getting ready for the Big One and learning how to calculate dividend cover ratios again; or, time to say, meh, and load the Super Duty with bargain-basement tech stocks engulfed by a dumpster fire.
Whilst we have in staff personal accounts been quietly accumulating exceptionally boring value names these last few months, whilst tech has been on fire - because everyone’s laughing at value investors right? - we don’t think tech is all over yet. We think the Big One is a ways away still. We think a bunch of tech names are poised to move up and bigly in the coming months. We think this not because of any special genius insight, but because the stock charts say so.
And in that light, when the market dumped TWLO by 15% after hours on a killer quarter, we bought the dip. Twice. (Our instant Trade Alerts told our Growth Investor Pro subscribers in real time that we were doing so). 
Twilio By Numbers
Here’s the numbers. Margins aren’t wonderful and cash usage continues, but the growth rate is superb.
Source: Company SEC reports,, Cestrian Analysis
Source: Company SEC reports,, Cestrian Analysis
Source: Company SEC reports,, Cestrian Analysis
Source: Company SEC reports,, Cestrian Analysis
The market is asking you to pay sub 18x TTM revenue for this 65% grower.
Source: Company SEC reports,, Cestrian Analysis
Source: Company SEC reports,, Cestrian Analysis
Source: Company SEC reports,, Cestrian Analysis
Relative Valuation
Source: Google Finance, Company SEC reports,, Cestrian Analysis
Source: Google Finance, Company SEC reports,, Cestrian Analysis
The stock is, as you can see, inexpensive for its growth rate. (Oh and by the way … $NET LOL).
This is where the action is.
Source:, Cestrian Analysis
Source:, Cestrian Analysis
This is a chart we prepared earlier, and we stand by it. We think we’re early in a Wave 5 move up that can take the stock to new highs (that’s $457ish) and beyond, perhaps into the $600s. 
Here’s another way of looking at it. Solid support in the high 200s, declining resistance, stock consolidating, likely to punch up and out of the range given the growth rate of the business.
Source:, Cestrian Analysis
Source:, Cestrian Analysis
We could see more weakness yet but we would be surprised if that 275-ish level breaks. And we think the stock is going up medium term, meaning the coming months.
We re-iterate our Buy - Long Term Hold rating and we think now is a good time to add to long term positions and/or take a short term long position.
And that, ladies, gentlemen and non-binaries, is our Idea of the Week. Have at it!
Cestrian Capital Research, Inc - 29 October 2021.
Disclosure: Cestrian Capital Research, Inc staff personal accounts hold long positions in, inter alia, TWLO.
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