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
Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.
- $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
David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
Every recommendation goes through 3 layers of intense scrutinyquantitative, fundamental and technical analysisto maximize profit potential and minimize risk.
Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.