Are Tech Stocks Getting Bubblicious? - Real Time Insight

By
A A A

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 )
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 )
P/E of 324
EPS growth: an actual decline of 73% in fiscal 2012

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

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

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

Will investors get burned?

 


 
SALESFORCE.COM ( CRM ): Free Stock Analysis Report
 
GROUPON INC ( GRPN ): Free Stock Analysis Report
 
PANDORA MEDIA ( P ): Free Stock Analysis Report
 
ZILLOW INC ( Z ): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: CRM , GRPN , LNKD , P , Z

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Budgeting for Baby
Budgeting for Baby                  

Stocks

Referenced

Most Active by Volume

86,692,048
  • $16.82 ▼ 1.35%
66,073,054
  • $13.30 ▼ 6.27%
54,801,491
  • $14.59 ▼ 1.35%
54,305,010
  • $76.55 ▼ 3.15%
53,982,567
  • $3.42 ▼ 2.01%
53,146,472
  • $97.21 ▼ 1.60%
50,334,521
  • $99.18 ▼ 1.56%
44,049,276
  • $25.03 ▼ 0.56%
As of 10/1/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com