3 Large and Growing Stocks With High Valuations

When quarterly financials are announced, many investors without warning drop to the bottom line to read the revenues per share. An increase in net profits is great, nevertheless only if it is generated on the back of increasing revenue will it be sustainable.

Baidu, Inc, a Chinese search engine, comes in with a fairly high PE in the low 80s as would be expected with a high growth stock. In spite of a current market cap of nearly 45 billion, the company continues to aggressively plow forward with a trailing 5 year growth around 100% and forward 5 year expectation over 57%. During the PE is likely to lower over time, this analyst ‘buy’ pick is building steam on growing revenue and an upwards 5 year return on equity trend that is but over 58%. Though this stock seems to have all the right metrics of a powerful giant, timing the buying and selling will be key.

Salesforce.com is another fast growing giant in the market with an incredibly high trailing PE of 259. In spite of this, analysts give the stock a ‘buy’ rating. Like as not they see a greater potential in cloud computing than I give the current company valuation for. During CRM has performed decently by growing its EPS 48% per year over the past 5 years, analysts don’t expect much for the straightway 5 with only 27.12% per annum anticipated. With a low profit margin of only 4.76% and very high valuations compared to sales, revenues, or book value, one can understand why the short ratio is hovering around 10%. During share prices seem to defy gravity, one can’t help nevertheless wonder how far extended valuations can get earlier fundamentals need to play catch-up.

Green Mountain Coffee Roasters Inc. is the third company to make the cut. It too has a high PE which is equal to BIDU, around 84, nevertheless the forward PE is much more reasonable around 25. EPS growth over the past 5 years has exceeded 46%, and the straightway 5 years are expected to bring in an annualized 33.5% revenues growth. This is quite impressive for a 6.24 billion ‘cup of joe’. The short ratio is very high at 26.2% which can be an ominous warning, or rocket fuel waiting to be lit. The 10 year trend on revenue has been one of accelerating growth, even though the same cannot be said for revenues growth. Their debt to equity has crept up of late during their return on equity has dropped off, yet analysts continue to give rate this ‘buy’. This boiling hot stock is one to keep your eye on as it breaks new highs.

Some other stocks that meet with analyst approval, high revenue and revenues growth, and being 2 billion market cap or more are the following:

The article Growth Stocks That Analysts Love

You may as well be interested in the article Growth Stocks That Analysts Love. Naturally that due diligence on these stocks with high valuations are a necessity as they will need to continue to shock and awe investors with their revenue and growth to prove they are worth the current lofty valuations.