“With stocks at or near alltime highs, financial publications and market pundits are providing plenty of hot air as they inflate a bubble by talking about a stock market bubble,” John Buckingham writes for Forbes.
“Even at current prices, I’m still finding attractive stocks. There are certainly many growth stocks trading for rich valuations, but the beauty of active portfolio management is that you don’t need to own them. For instance, if you look at the S&P 500 you see that one of its most popular components is Netflix, the video subscription service, which trades for more than 300 times earnings,” Buckingham writes. “Sometimes stocks do grow into their multiples, but I find Netflix hard to justify at these levels. Something much easier to digest is the modest valuation of a world-class franchise like Apple, which trades for 14 times earnings and also rewards shareholders with a healthy 2.1% dividend yield.”
Buckingham writes, “Believe it or not, if Apple were awarded the same earnings multiple as Netflix, the consumer electronics superstar would change hands at nearly $12,000 per share.”
Read more in the full article here.