Stock: Appen Limited
Symbol: APX
Exchange: ASX
Appen was added to the ASX 200 in June 2018 and displays strong performance in both LT technical and revenue & earnings growth.
Despite this, we have not added APX to our model portfolio, or issued a buy signal, because of its market position.
We are looking for companies with a competitive advantage that enables them to defend market share against competitors, without compromising profit margins.
APX competes in a crowded, technology-driven market against a vast number of competitors (over 17,500 Content Relevance and Language Resources providers, according to Jacob Simonsen at Lincoln) and is vulnerable to technology advances by competitors that could make it difficult for APX to defend its market share.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He founded PVT Capital (AFSL number 546090), which provides income and growth strategies to wholesale clients.
Colin also co-founded Incredible Charts and writes the popular Patient Investor newsletter.
Using a top-down approach, Colin identifies macro trends in the global economy and then combines fundamental and technical analysis to evaluate opportunities in sectors that stand to benefit.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.