The New Economy and its Winners Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The New Economy and its Winners

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Bill Harmond who wrote (56613)	2/24/2014 10:49:37 AM
From: The Ox	Read Replies (3) of 57684

I find all of the stocks you mentioned interesting but I can't seem to be bullish on them due to their excessive price to sales ratios. Even if they continue to grow at 100% a year, when you pay 40 times sales, you need a minimum of 3 to 5 years before the valuations start to come into line. Most aren't expected to grow revs that fast, more likely in the 50% per year range. For example, we bought SPLK at $31/share but I wouldn't buy it here at $90/share, even with the solid growth they've shown over the past 2 years. Trading at 35 times sales seems a bit excessive, even with their solid gross margins and revenue growth. Similarly, we purchased CRM the last time it fell below $40, but would certainly hesitate to pay $64, even if they are much more in line at 10 times sales. I simply scratch my head at WDAY (p/s 45) and FEYE (p/s 57). Great products, and from what I can see, very solidly run but based on current growth expectations, I just can't pay a 4 year forward valuation for them. DATA (p/s 26) seem much more in line but still pricey.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next