Amazon may be just a ho-hum book seller - profitless I might add, but Dell is another story. They continue to beat Wall Street estimates and have growth rates and profit margins well above any other "boxmaker". Why do you think Dell is rewarded with a PE in excess of 50 while IBM sits at 21?
<Buying stocks at 40 or 50 times estimated earnings many years into the Mother of All Bull Markets... well, may the Force be strong with you!>
Thank you very much ! Seriously, I have been hearing this line for years about certain companies, yet they just keep going up. For years people have scoffed at MSFT's multiple being pricey....well guess what, they continue to climb year after year. The reason being, they deliver as promised.
LU and DELL are no ordinary companies and for that matter cannot be compared to KO or MCD. I will, however, concede one point to you that not all companies can maintain such a lofty multiple, but when you have a company with growth rates in excess of 40 and 50%, a 50 or 60 multiple may still be cheap.
I see LU breaking 125 before their next earnings report if not sooner and I will continue to add to my core position on dips. By the time the big bad bear arrives LU will have soared another 30+ points, so who cares if they retreat 10 or 20% after that? Waiting for a crash or a bear market will cost you more in the long run.
IMHO, investing money, you do not need in the near future, in quality companies will make you wealthy over the long haul.
Rajiv
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