COMMENTARY ----- Do PE's and Valuation Suddenly Matter Again?
I found CNBC's dual analyst battle over Intel's prospects pretty interesting. It turned out that the analyst we love to hate, Joe Osha ("Mr. Wishy-Washy") was right. Just a month ago, he re-iterated a "Strong Buy" on Intel, but now he was changing his sentiment. To her credit, Maria Bartiromo grilled him on it.
But he did say something that I didn't really expect. Basically, he stated that valuations, in this market, matter more than they did 30 days ago. If this is true (and I believe it is), watch out. You may want to seriously look at your investment or even trading philosophy.
Take a look at this:
OVERPRICED STOCKS?
AMAT --- PE = 118, PEG = 1.87
INTC --- PE = 40, PEG = 1.81
NVLS --- PE = 87, PEG = 1.64
CSCO --- PE = 44, PEG = 1.24
DELL --- PE = 35, PEG = 2.17
SAFER STOCKS?
ESST --- PE = 12, PEG = .57
NVDA --- PE = 17, PEG = .65
ADVP --- PE = 17, PEG = .65
KG ----- PE = 19, PEG = .77
MYL ---- PE = 15, PEG = .95
The list goes on, but you get the idea. Maybe it's time we look more seriously at PE's and PEG's. We always have on this thread, but many have not. They have only looked at "technicals". Maybe others may want to be more careful of holding the TER's or AMAT's. It sure seems more prudent than ever to start to look at out-of-favor stocks that are undervalued. After all, it would seem logical that a stock with good fundamentals would help limit its downside risk, if not short term, than over an extended time horizon. Conversely, the risk of a high PE stock falling is greater than it has been since the dotcom crash, especially if valuation really does matter again. |
