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.NEW YORK ( TheStreet) -- Software giant Red Hat (RHT - Get Report), a leader in open source technologies as well as cloud computing has now become one of these names that have placed me in the predicament of trying to justify its lofty valuation to potential investors. I'm not going to pretend that this a "rock and hard place" type of situation, but how do you rationalize taking a position in a stock sporting a P/E of 80 after it has already gained 50% on the year? It gets even more remarkable when you consider that a competitor such as VMware (VMW - Get Report), which by many standards already qualifies as expensive but trades at a multiple that is 14 points less
What's the Deal With Red Hat?
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
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
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
Every recommendation goes through 3 layers of intense scrutinyquantitative, fundamental and technical analysisto maximize profit potential and minimize risk.
More than 30 investing pros with skin in the game give you actionable insight and investment ideas.