The table below is comprised of the equities I've written about except for Apple (AAPL), Netflix (NFLX), Informatica (INFA) and American Superconductor (AMSC). The reason for their omissions, is that I am not interested in buying them at a later date for various reasons. The data in the table was obtained from two sources, Seeking Alpha for the Forward P/E Ratios and Yahoo Finance for the projected five year compound annual growth rate.
|
SYMBOL |
FORWARD P/E |
5 YEAR CAGR |
PEG RATIO |
|
AKAM |
18.4 |
15.28% |
1.2 |
|
APKT |
53.3 |
21.87% |
2.44 |
|
ARUN |
801.7 |
27.12% |
29.5 |
|
ATHN |
85.3 |
33.53% |
2.5 |
|
CELG |
16.1 |
24.35% |
0.66 |
|
CRM |
530.2 |
26.56% |
20 |
|
DLB |
11.1 |
15.5% |
0.7 |
|
FFIV |
25.8 |
22.71% |
1.3 |
|
HOLX |
12.1 |
9.2% |
1.3 |
|
ILMN |
34.6 |
27.8% |
1.27 |
|
ITRI |
8.4 |
9.65% |
0.87 |
|
NTAP |
18.3 |
18.21% |
1.0 |
|
NUAN |
17.9 |
13.0% |
1.38 |
|
NVDA |
11.4 |
15.17% |
0.75 |
|
PAY |
21.9 |
22.5 |
0.97 |
|
SEAC |
11.9 |
46% |
0.26 |
|
STP |
6.4 |
6.78% |
0.94 |
|
TIBX |
30.3 |
14.5% |
2.09 |
|
UTHR |
18.2 |
43.52% |
0.42 |
|
VECO |
6.8 |
13.33% |
0.51 |
|
VMW |
58.2 |
25.28% |
2.3 |
I did a double take when I saw the P/E Ratios on both Aruba Networks (ARUN) and SalesForce.com (CRM), so I reconfirmed their valuations on Yahoo Finance. They're in the ballpark with the Seeking Alpha metrics which means they've been a house of fire of late even though they're off their 52 week highs. I like the business models for both securities, but they have pushed it to the limits and need to come back down to earth.
Other equities in the cloud computing sector seem overvalued, too. Acme Packet (APKT), Athena Health (ATHN), Tibco Software (TIBX) and VMware (VMW) all have PEG ratios over 2, which translates into very expensive stocks. My preference for buying equities is the lower the PEG Rate, the better, but sometimes you get caught in a value trap. I don't believe any of the other stocks on this list will be value traps because the growth stories behind the companies are very compelling. That said, I still believe that we are in a period when P/E ratios will contract, not expand due to the consumer and governmental debt problems countries around the world are facing.
To top things off, I am including a table of these same securities and their performances since my original articles. At the time I wrote those articles, the prevailing wisdom was that they could do no wrong and would only trend higher.
|
SYMBOL |
ORIGINAL PRICE |
ORIGINAL DATE |
LAST PRICE |
% GAIN/LOSS |
|
APKT |
75 |
4/7/11 |
52.33 |
-30.23 |
|
ARUN |
28 |
6/1/11 |
22.25 |
-20.54 |
|
ATHN |
45 |
3/5/11 |
52.12 |
15.82 |
|
CELG |
53 |
2/16/11 |
53.65 |
1.23 |
|
CRM |
140 |
2/17/11 |
134.35 |
-3.89 |
|
DLB |
48 |
4/2/11 |
32.70 |
-31.87 |
|
FFIV |
95 |
4/2/11 |
76.12 |
-19.87 |
|
HOLX |
20.50 |
4/18/11 |
15.82 |
-22.83 |
|
ILMN |
70 |
3/1/11 |
52.47 |
-25.04 |
|
ITRI |
48 |
6/10/11 |
39.38 |
-17.96 |
|
NTAP |
54 |
5/15/11 |
42.68 |
-20.96 |
|
NUAN |
18 |
3/9/11 |
17.93 |
-0.39 |
|
NVDA |
18 |
5/23/11 |
13.41 |
-25.5 |
|
PAY |
55 |
4/8/11 |
36.36 |
-33.89 |
|
SEAC |
9 |
3/21/11 |
7.66 |
-14.89 |
|
STP |
8 |
3/21/11 |
6.47 |
-19.13 |
|
TIBX |
30 |
5/10/11 |
23.66 |
-21.13 |
|
UTHR |
65 |
3/23/11 |
51.33 |
-21.05 |
|
VECO |
52 |
2/23/11 |
37.09 |
-28.67 |
|
VMW |
93 |
5/8/11 |
90.25 |
-2.96 |
I rest my case.