Notice to all from Briefing.com:
INTERNET STOCKS: Would it come as a surprise if I told you that Internet stocks have been the champions of the recently tumultuous market. Names such as America Online (AOL 89 1/4 -3/4) have been driven to 52-week highs by the bullish comments of Wall Street analysts: Dec. 3, Prudential starts with a "buy" and a 12-month target of $91; Dec 5, both Smith Barney and Raymond James initiate coverage with "buy" ratings and 12-month price targets of $100 and $110, respectively. Recognizing the company's low-exposure to Asia and superb growth rates, investors have been looking to buy AOL shares on every dip. The search engines, however, have not had the benefit of recent analysts recommendations. Yet, Yahoo! (YHOO 66 7/16 +2) is setting a new 52-week high today, even though the stock is trading at 190x analysts' FY98 estimate and sporting a price-to-sales ratio (trailing twelve months) of 57.66, a full 1238% above the average P/S ratio for the sector. Other up-and-comers include Lycos (LCOS 38 1/2 +3/8), 52-week high $42 and Excite (XCIT 27 +1), 52-week high $35. You can bet that a much of the rebound in the search-engines has been caused by short-covering, as investors got frustrated by the sectors resiliency during the sell-off in tech and the strength of the overall market in the face of the Asian financial crisis. The $6 million question is: How long can these stocks hold up? Well, 1997 has taught us that these stocks have no trouble breathing at lofty heights. However, on the first sign that the market is beginning to crack, I would be adding my name to the list of investors/traders looking to make a buck in this sector on the short side, particularly in a 2nd-tier name like Lycos.
13:45 ET ******
Best wishes to all,
BellBoy |
