Sunday, October 28, 2007

Signs of a Bubble?

There are several names that are trading at very extreme valuations in today's market. The overall theme behind these companies is technology (again) and China. Some of these may have good growth prospects, but their moats seem relatively weak and at these prices the risk for shareholders is large.

Company Ticker / Price to Earnings / % gain in last 3 months (approx.)

ISRG / 107 / 130%
AMZN / 104 / 50%
APPL / 47 / 80%
CME / 47 / 25%
SPWR / 593 / 100%
JRJC / 587 / 600%
BIDU / 210 / 180%
CTRP / 95 / 57%
SINA / 73 / 57%
VMW / 224 / 100%
RIMM / 78 / 140%

1 comment:

Anonymous said...

Some of these stocks are also now appearing on Valueline's "highest PEs" list...

If you add up the overvaluation evidence in your recent update of the "Stock Market Capitalization to GDP" article and the fact that Buffett pulled out of Petrochina on valuation (and had further overvaluation commentary regarding China)... evidence that we are entering bubble territory keeps popping up.

At the very least, you have certainly identified some of the "glamour stocks du jour".

Though they could always keep rising, there seems to be little on this list that would have a "margin of safety" for intelligent investors out there.