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Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (43113)	6/26/2008 10:01:25 AM
From: Bill Harmond	Read Replies (1) \| Respond to of 57684

IMO a great example why most journalists don't understand WTF they're writing about individual companies' relative valuations: 08:19 Don't pay through the nose for these pricey tech shares - Barron's Barron's reports with the Federal Reserve unlikely to come to anyone's rescue this summer, oil still sky-high, and corporate IT budgets in a state of flux, pricey tech shares probably won't show substantial gains the next few months, and may even cost investors a bundle. Stocks of some leading tech cos are trading at absurd multiples relative to the rest of the technology universe. Why, for example, is Salesforce.com (CRM) trading at a price-to-earnings (P/E) multiple of 110 times next year's projected earnings, when Microsoft (MSFT) trades at just 13 times? Other egregious examples abound. Storage-equipment vendor Data Domain (DDUP) has mastered very complex technology with its information-archiving equipment and software. Does that mean it should trade at 264 times the next four quarters' earnings? No. Barron's identified four other stocks that seem unlikely to "grow into" their rich valuations by substantially outperforming in a beleaguered economy. Advent Software (ADVS), Rackable Systems (RACK), Vocus (VOCS) and Equinix (EQIX) are all promising companies, but their shares could take a breather before investors return to their Bloomberg screens after Labor Day. Even the best forecasts for earnings leave these stocks too dear at a time when software bookings and equipment purchases could still be hurt by a macroeconomic slowdown in coming quarters.