They are if the fundamentals say they are. So yes, many are. GOOG seems fairly valued if you assume antitrust doesn’t crack down hard in the near future
Many are also still egregiously overvalued at 10x or more sales. NET, DDOG and NVDA come to mind.
It’s not hard to look at growth rate relative to current value to separate the two. Seems most investors lost any sense of fundamentals in the ZIRP world though
You can treat earnings/FCF multiple as the yield you get today. So a PE of 20 implies a 5% yield this year, while the 10y is at 4% ish. Then use various growth projections and future discount rate projections to determine if that multiple is justified.
Personally I’ve only been buying companies at around 10% current year yields, and only higher if they have sufficient growth to justify it
Many are also still egregiously overvalued at 10x or more sales. NET, DDOG and NVDA come to mind.
It’s not hard to look at growth rate relative to current value to separate the two. Seems most investors lost any sense of fundamentals in the ZIRP world though
You can treat earnings/FCF multiple as the yield you get today. So a PE of 20 implies a 5% yield this year, while the 10y is at 4% ish. Then use various growth projections and future discount rate projections to determine if that multiple is justified.
Personally I’ve only been buying companies at around 10% current year yields, and only higher if they have sufficient growth to justify it