![]() ![]() That is a long payback period risk that most business people would not be willing to risk if it were a private company. If you owned the whole company at that price, and could not sell to anyone else, you would have to wait 34 years before your principal would be earned back. So I will give you one last idea to consider.īuying a stock with a 45 time P/E or even a 34 times P/E implicitly implies you have to own it a long time. ![]() But I still feel that analysts are not concerned enough about the stock’s high valuation. Everyone knows that margins were going to be lower from lower demand due to Covid-19. For example, it might be easy to write off my charts above. I suspect that most people like to see a stock rise, even though they know the valuation is out of whack. That might also be another reason to not listen to me. So maybe I was right?īy the way, I never wrote an article on NVDA when it had slumped. It went up further … but eventually went down. I was sort of wrong the last time I said that the stock price had peaked. Any hiccup in earnings growth will push the stock lower. In the high-tech world, there’s always another competitor right around the corner. The problem I have with these high valuations is that the company must perform perfectly. For example, Benzinga came out with an article after the Q1 earnings release in late May showing that many analysts expect NVDA to rise above $400 per share. ![]()
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