For this week's Stock of the Week I want to throw caution to the wind and pick a stock in an industry I know nothing at all about except that it has an over propensity of nerds working in it and some of them are billionaires.
The company is Xero Ltd [XRO.NZ] and the industry that it competes in is computer software, in Xero's case online business accounting software, you can find out more about Xero at Kelvin Hartnell's excellent blog, he is a big fan and a happy shareholder.
Warren Buffett says he doesn't invest in companies and industries he doesn't understand and the same goes for me, but some of you out there reading this just might know what this company is about and can see the potential it might have in the future.
Xero has yet to make money, but is making inroads into its sector of competence, big boys like Quicken and MYOB are starting to notice their presence but the company has still yet to make some green stuff. It doesn't look likely it will soon either.
Like I said though, the potential is there to make some big money, if they really take off or lose the lot if the company ends in tears. This is a high risk investment, with any payoff being long-term.
It has some big backers in New Zealand, like Sam Morgan of TradeMe fame but its share price has taken a bit of an upwards trajectory over the last 4 months going from around 65c to its present $1.38 at close of market yesterday, so it makes the company a whole lot more unattractive at these prices.
If you know this industry though, this stock could be for you on weakness.
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Xero @ Share Investor
Share Investor Interview: Xero's Rod Drury
FY 2010 Profit Result
Xero Ltd: Download full Company Analysis
Rod Drury ready for the long-haul with Xero
Rod Drury on Xero and Growing Business
Xero set for surprise to the Market?
Share Investor's 2010 Stock Picks
Stock of the Week: Xero Ltd
Discuss Xero @ Share Investor Forum
Download Xero Company Reports
Buy Every Bastard Says No - The 42 Below Story, by Geoff Ross & Justine Troy & more @ Fishpond.co.nz
c Share Investor 2009
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