Here Are 5 Of The Most Classically Overvalued Stocks On The NASDAQ

Here Are 5 Of The Most Classically Overvalued Stocks On The NASDAQ

Do any well-known, heavily traded stocks like this exist? Good to keep in mind, though, that a p/e of 240 is 8 times that of the market taken as a whole. This drug and biotech manufacturer has a price/earnings ratio of 266 and is trading at 32 times book value. As with many biotechs, stocks in this sector can move quickly: Ionis jumped from $40/share to $60 this year between April and July. Looks like that expectation may be priced in. The company has put together a nice string of positive earnings quarters. Couple of items to consider: the stock is now selling at 26 times its book value. The price/earnings ratio is 147, so some analysts might conclude that the market is expecting those earnings to continue. The price to book ratio is 22, so we're way out of "value stock" territory with Vertex.

Jack Dorsey just spent $9.5M buying more Twitter stock
Jack Dorsey just spent $9.5M buying more Twitter stock
Twitter stock was ‘overrated’ but will now see some upside, major shareholder Steve Ballmer says
  • Facebook
  • Twitter
  • Google+
  • Buffer
  • Pinterest
  • LinkedIn
Shutterstock

What stocks would be found if we reversed the classic value stock methods of Warren Buffett’s mentor Benjamin Graham? What if we turned the process on its head and looked only for those equities trading at the highest price/earnings ratios and at much greater than book value? Do any well-known, heavily traded stocks like this exist?

Well, yes, they do exist. It’s not that surprising given that we’re in the middle of a years-long bull market. Here are 5 NASDAQ stocks that meet the reverse value criteria:

  1. Amazon. CEO Jeff Bezos is a genius who seems to do everything right. Amazon is taking over all of retail and that includes supermarket shelves now that it has swallowed Whole Foods. That’s the bullish narrative, in a nutshell, and is said to explain the reasons that the stock has a price/earnings ratio of 247 at a time when the cyclically adjusted p/e for the S&P 500 is about 31. Investors have priced in future tremendous success for the company and they may be right, who knows? Good to keep in mind, though, that a p/e of 240 is 8 times that of the market taken as a whole. Amazon is #3 on the Forbes Most Innovative list.
  2. Broadcom Limited. The price/earnings raio of 200 appears to be a temporary phenomenon related to a difficult earnings quarter — the forward p/e of 14 seems more reasonable. On the other hand, the 6-month…

Pin It on Pinterest

Share This