Dot-Coms: 2 Safer Stocks to Consider
The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
By David Sterman
NEW YORK (StreetAuthority) -- It appears as if we've finally shaken the ghost of the dot-com bubble. The Nasdaq has been moving up sharply during the past few years and now trades at levels seen back in 2000, and a few recent dot-com IPOs are now valued in the billions of dollars. Yet as I noted in this article, investors may be setting themselves up to repeat history, assigning market values to companies that still have a lot to prove.
Simply put, any company that is worth $8 billion, $9 billion or even $10 billion needs to be treated as a hot young growth stock for years to come if investors are to see any further upside. That's why I reflexively gravitate to stocks that appear to embed a much lower level of expectation.I also like to see these stocks move out of favor, at least temporarily, when a real sense of value can emerge. That's why I recently put Zipcar (ZIP) in my $100,000 Real-Money Portfolio. It's also why I tend to hold off pursuing a recent gainer like real estate data service firm Zillow.com (Z). Zillow's shares have risen roughly 40% in the past three months, and I'd rather check it out on a pullback. Follow TheStreet on Twitter and become a fan on Facebook. But a pair of other dot-coms is squarely in the doghouse, and their current valuations seem to sharply discount potential strong growth to come.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV