Tech stock investors are a nervous bunch these days, and they have a right to be. Analysts are skeptical that these well-known (and heavily overbought) companies can grow revenues enough to justify the recent moves in their stock. One wrong whiff and these tech stocks could drop sharply in a single day!
Valuations are a serious worry for investors. When the market drives a company higher despite high price-earnings ratios (especially on forward estimates), that’s a signal of strong growth ahead.
The savvy investor, however, knows to avoid companies with prospects that are not as great as everyone thinks. Even one short-term blip, such as disappointing earnings results, can decimate stock prices.
The following seven stocks trade for forward P/Es of more than 50 — more expensive than the market a couple of times over, and far enough into the “danger zone” to start worrying. Each of these stocks could be a big target for selling amid the next broad market downturn.