Still, this busted IPO sells for less than half the peak levels it saw soon after its August 2011 IPO. From a recent $9.30, Merrill Lynch says shares should rebound to $16. This target equates to four times projected sales, which is still below the multiples seen by other cloud-based businesses such as
Risks to Consider
: Though investors no longer hold these companies to exceedingly high expectations, they are still expected to grow at a good pace in coming years. Any signs that growth is stalling out should probably seen as a reason to sell the stock.
Action to Take -->
The market is full of new dot-com business models that carry high expectations. If you want to ride the dot-com wave, then focus on lesser-priced stocks like these two examples.
David Sterman does not personally hold positions in any securities mentioned in this article. StreetAuthority LLC owns shares of ZIP in one or more if its "real money" portfolios.
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