Monday, February 11, 2013

Where do Growth Stocks Peak?

Over the course of the recent bull market there have been a few growth stocks that have hit extreme levels only to come crashing down.  Although some of these have recovered slightly, those that come to mind include: NFLX, GMCR, OPEN, MNST and CMG.

As a post-mortem on these stocks, below is a chart of the price to sales multiples that they hit at their highest levels.  For comparison I included the peak price to sales multiples of five stocks that had similar sentiment (judged subjectively) at the 07 peak and five from the dot com era.  Also included are the current multiples of six growth stocks that haven't slowed since 2009.

momentum price to sales peak
Note: red bar is the average multiple for the group

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