How are you valuing companies positively impacted by COVID?

by an investor

3 years ago

I'm looking at a few companies positively impacted by COVID-19. They also benefit from large macro tailwinds in general, so it is hard to understand what growth is organic and what is one-time from Covid.
How are folks navigating discussions with brokers and Sellers around realistic benefits from COVID-19?
I am considering using historic 3-year averages and some additional Seller financing.

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searcher from National University of Ireland, Galway

Basically you have risk in the upside. More seller financing is wise as it shares that. Also consider whether the upside is because of a values change in the consumer / customer or a needs change. Needs changes will be short term A values change can stick around after the initial driver goes away. Talking to customers around the reasons they choose to buy is a good way to determine what is going on.

3 years ago | like reply | 0 likes

searcher from Temple University

If you take a look at the 2021 and 2022 projections in the IBISWorld reports (especially via the key statistics page by % change), it's helpful in determining which industries are getting a COVID "bump" vs the ones that project to come back down to industry norms (i.e. Hospital Bed Manufacturing off the top of my head).

If interested, a more advanced tool IBISWorld offers is the Industry Wizard that can allow you to map out time series data and then do your own analysis to determine which industries having the biggest delta in their 2020 results vs the prior years and project future years. Shoot me a message if you want to learn more!

3 years ago | like reply | 0 likes

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