Sure, P/E does mean something in this day and age. But, not so much in this case. More important is the price to sales ratio. The reason being:
A good strategy, for a company like Yahoo in an industry that has explosive potential like the internet, is to establish itself as dominant, and leave its competitors in the dust. A preparation, a setting up, if you will, for future control of a market that will be the premier form of medium over all others; television, newspapers, magazines, etc. If you look at the numbers, you will see that Yahoo is pumping everything it has back into itself for this purpose. This results in low earnings reports.
With this in mind, P/E is of little concern right now. In the future it will be. What should be watched at this point in time is the P/S ratio.
You are absolutely right, when you say, 'if/when a correction hits the market, the high flyers fall the first, fastest, & hardest.' There is that risk. I'm in long term, though. If there isn't a correction soon, this one could pass you by.
Personally, I would like to see the price stablize a bit. Another Iomega wouldn't be healthy. The $2 correction Fri. seems reasonable.
I differ with your opinion of a fare price of $25. I set my price around $30, and I believe I'm being concervative. Of course, if you look at it over the long term, you and I are splitting hairs.
Best Regards,
Kevin |
