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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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