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For All Your Investing Needs |
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Welcome to the Investing Section of Options Realm |
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Today (2/15/2007) I am writing to you about a something that I have noticed involving the valuation of stocks related search engines online. I first started following the stock market in late 2000 right around the tech top. I think this bad timing on my part may have forever engrained something into my mind but lately I have been noticing that the price of the search engine stocks have been reaching very high levels. While I understand that the internet is still a relatively young thing I do not think the value is there in these companies to support their current stock prices. I am mainly talking about Yahoo and Google. Google has gone from over 500 to around 460 over the past few weeks. Yahoo on the other hand has traded up over 31 from around 28 over the past few weeks. What does this mean? Honestly, I don't know but what I do know is that the value based off of Free Cash Flow does not justify the current prices of these two companies. Does this make either bad companies? The answer to that is certainly NO. Yahoo and Google are both GREAT companies but it is very important to understand that a great company may not be a great investment. I love what Google and Yahoo have done for the internet yet from a financial standpoint I can not justify investing with the companies. The point of this article is to make you wonder why is a company worth investing in and what causes these great companies to be so overvalued.
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