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| Our weekly list of the 10 most
overvalued, overrated stocks. These are the stocks the analysts are pushing the hardest
and the crowd is rushing to buy. These are also the stocks which have the farthest to fall
when investor sentiment turns. Stay ahead of the crowd, and avoid these stocks where
mania has taken a front seat to fundamentals. |
7/06/99 |
| Name |
Ticker |
Price |
Projected
P/E Ratio |
Price/Sales |
5 year
Growth Rate |
(Proj. P/E )/(5yr. growth ) |
Industry |
1. eBay Inc. |
EBAY |
143.63 |
427.6 |
230.2 |
63.1% |
6.81 |
Online Auctions |
| Online auctioneer that has been mistaken for a technology
stock. The online auction world is becoming increasingly crowded with few barriers to
entry. The recent entry of Amazon.com to the field is likely to put the heat on EBAY
in coming quarters. Compare EBAY's valuations to established industry leader Sotheby's.
When investors categorize this one in the correct industry (i.e. auctions, not internet)
it will have far to fall. Well publicized technical problems have put a damper on
stock price recently. |
2.
Yahoo Inc. |
YHOO |
178.13 |
316.5 |
158.3 |
59.4% |
5.33 |
Internet Portal |
| Internet search engine turned "portal". Valuations
on YHOO are at manic levels, even compared to its overpriced industry. Portals (a.k.a.
trying to provide the broad range of services that AOL does) are this year's fashion.
Unfortunately everyone has bought the stocks, and everyone in the online arena has rushed
to start their own portal. Portals are increasingly becoming commodities as they
race to please everyone by offering the same features as their competitors.When sentiment
turns it will be ugly for holders of this stock. YHOO's current valuation levels discount
the next 5 years of earnings growth. Earlier this year the stock's market cap briefly
surpassed the combined market cap of all stocks traded in Singapore. |
3.
At Home |
ATHM |
54.94 |
261.6 |
196.2 |
60.0% |
4.36 |
Internet |
| ATHM is the leading provider of cable-based and leased
digital line internet access services to consumers. Recent acquisition of Excite
makes company a player in the increasingly crowded portal company. Trading at 196
times sales. Current valuations discount all growth out to 2003 and leave no room
for error (or for advances in technology). |
4 Ameritrade |
AMTD |
108.63 |
144.2 |
26.2 |
33.8% |
4.27 |
Internet |
| Online broker has been spending heavily in an effort to
maintain its growth momentum in the increasingly crowded and competitive online brokerage
field. Company's recent spending will come back to haunt it when the inevitable
market downturn occurs and trading volume declines. |
5 Real
Networks |
RNWK |
89.94 |
556.2 |
67.7 |
41.7% |
13.4 |
Internet |
| The maker of software that enables internet users to see and
hear streaming media programming on the internet. Faces competition from many other
software makers (including Microsoft). Current valuation discounts next 13 years of
growth. |
6.
America Online |
AOL |
115.25 |
200.2 |
32.3 |
50.5% |
3.96 |
Internet |
| S&P 500 member AOL is the only blue chip Internet stock.
The company's current valuation levels discount ALL growth out to mid 2003.
Company faces competition from Excite At Home and portals among others. |
| 7.Lycos |
LCOS |
99.81 |
301.1 |
38.5 |
52.9% |
5.69 |
Internet |
| Lycos stock is making a run to overtake YHOO as the most
overvalued portal. Escaped recent internet sell off. Merger hopes drove price
up. Stock price held up well during last month's Internet selloff. |
| 8. CNET Inc |
CNET |
49.81 |
152.2 |
56.9 |
46.3% |
3.29 |
Internet |
| A leading internet portal and content player. producess the
C/Net television program and the SNAP! portal among others. Trading at 56.9 times
sales. Current valuation discounts expected earnings growth out to 2002. |
| 9.Go2Net |
GNET |
89.25 |
419.6 |
209.8 |
28.0% |
14.9 |
Communications Software |
| The company that brings you Silicon Investor. GNET has
added its name to the list of companies trying to strike it rich in the portal business.
Current valuation discounts the next decade of growth. |
| 10 ETradeGroup |
EGRP |
39.94 |
305.3 |
23.9 |
39.1% |
7.81 |
Discount Broker |
| A brokerage firm that has been misclassified as a technology
stock. The company, like all brokerage firms, is subject to the cyclical ups and downs of
the industry. When the current internet stock bubble bursts it will be hurt more
than most--the "excitement" of online trading will lose its luster when the
market enters a sustained change in direction. Current price discounts the next 7
years of earnings growth. |
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