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Zacks #1 Stocks on the Move 05/17/2013

Company Name Symbol %Change
VIASAT INC VSAT
19.35%
OLD SECOND B OSBC
5.76%
GAMCO INVEST GBL
4.61%
CORNING INC GLW
4.47%
SYNCHRONOSS SNCR
4.23%

Are Tech Stocks Getting Bubblicious?

by Tracey Ryniec

February 16, 2012 | Comments : 5 Recommended this article: (0)

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Apple may be hitting new all-time highs and trading with a forward P/E of "just" 11.6, making it a value stock, but many other hot Internet and technology stocks don't look quite so cheap. Just the opposite. Many are trading at nosebleed levels.

Yet the justification has always been that you're paying for growth and that growth doesn't come cheaply. After all, investors must pay a premium to buy into the hottest technologies.

As the 2012 stock rally advances, however, many of these stocks have also seen big gains and that has pushed their P/E ratios even higher.

Take a look at the forward P/Es of some of the glamour companies and their expected growth rates:

1. Pandora ( P - Snapshot Report )
P/E of 1235
EPS growth: expected to lose a penny in fiscal 2012 and make a penny in fiscal 2013 for 172.4% growth

2. LinkedIn (LNKD)
P/E of 356
EPS growth: 89.2%

3. Salesforce.com ( CRM - Analyst Report )
P/E of 324
EPS growth: an actualdecline of 73% in fiscal 2012

4. Zillow ( Z - Snapshot Report )
P/E of 133
EPS growth: 264%

5. Groupon ( GRPN - Snapshot Report )
P/E of 73
EPS Growth: 127%

Has irrational exuberance again gripped some segments of the technology sector?

Will investors get burned?

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