{"id":1635,"date":"2023-02-22T16:00:40","date_gmt":"2023-02-22T16:00:40","guid":{"rendered":"https:\/\/tradersontrend.com\/?p=1635"},"modified":"2023-02-22T16:00:40","modified_gmt":"2023-02-22T16:00:40","slug":"expensive-and-overpriced-avoid-these-3-stocks","status":"publish","type":"post","link":"https:\/\/tradersontrend.com\/h\/2023\/02\/22\/expensive-and-overpriced-avoid-these-3-stocks\/","title":{"rendered":"Expensive and Overpriced? Avoid These 3 Stocks!"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"1635\" class=\"elementor elementor-1635\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-659f6b16 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"659f6b16\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-5d9dea90\" data-id=\"5d9dea90\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-65bcecaf elementor-widget elementor-widget-text-editor\" data-id=\"65bcecaf\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<style>\/*! elementor - v3.21.0 - 26-05-2024 *\/\n.elementor-widget-text-editor.elementor-drop-cap-view-stacked .elementor-drop-cap{background-color:#69727d;color:#fff}.elementor-widget-text-editor.elementor-drop-cap-view-framed .elementor-drop-cap{color:#69727d;border:3px solid;background-color:transparent}.elementor-widget-text-editor:not(.elementor-drop-cap-view-default) .elementor-drop-cap{margin-top:8px}.elementor-widget-text-editor:not(.elementor-drop-cap-view-default) .elementor-drop-cap-letter{width:1em;height:1em}.elementor-widget-text-editor .elementor-drop-cap{float:left;text-align:center;line-height:1;font-size:50px}.elementor-widget-text-editor .elementor-drop-cap-letter{display:inline-block}<\/style>\t\t\t\t<p>The stock market offers no guarantees but here&#8217;s a near-certainty: investing in expensive stocks that trade for 100 times revenue will lead to disaster.<br \/><br \/><span style=\"font-family: inherit;\">I&#8217;ve warned against 81 of them since 2000. In the next year, 73% of those surveyed lost money and 85% underperformed the Standard &amp; Poor&#8217;s 500 Total Return Index.<\/span><\/p><p>Most equities have historically sold for about 1.5 times revenue. The average multiple today is around 2.5.<\/p><p>Tesla (<a href=\"https:\/\/www.google.com\/finance\/quote\/TSLA:NASDAQ\">TSLA<\/a>), a well-known costly stock, trades at 8.9 times revenue. <br \/><br \/>Microsoft, one of history&#8217;s most successful firms, is valued at 9.5 times its revenue.<\/p><p>If a stock is worth 100 times its revenues, investors are overjoyed with its prospects. These are hope stocks, hype stocks, and, in many cases, <a href=\"https:\/\/www.investopedia.com\/meme-stock-5206762\">meme stocks<\/a> (stocks popular with Internet &#8220;Apes&#8221;).<br \/><br \/><strong><span style=\"font-size: 24.5px; font-family: inherit;\">Biotech Enhancers<br \/><br \/><\/span><\/strong><span style=\"font-family: inherit;\">There are now 28 stocks with a market capitalization of $1 billion or more that trade for 100 times earnings or more. <br \/><br \/>Twenty-seven of them are in the healthcare industry, with the majority of them being biotechs.<\/span><\/p><p>Why is it not a mystery? In their early years, biotech companies often generate little or no money while they invest resources in researching a solution for one or more diseases. <br \/><br \/>The study is interesting, and the potential payout is substantial.<\/p><p>The ultimate success would be a <a href=\"https:\/\/www.webmd.com\/cancer\/guide\/cure-for-cancer\">cancer cure<\/a>. Someone will eventually discover one. Yet, the chances of it being the company you invested in are slim.<\/p><p>Cars were new and auto stocks were hot a century ago. The majority of them perished. Radio stocks experienced the same fate. <br \/><br \/>Picking the final victors from today&#8217;s generation of budding biotech startups is also a difficult task.<br \/><br \/><strong><span style=\"font-size: 24.5px; font-family: inherit;\">Virgin Galactic<br \/><br \/><\/span><\/strong><span style=\"font-family: inherit;\">The spaceflight firm founded by British entrepreneur Sir Richard Branson, Virgin Galactic Holdings (<\/span><a style=\"font-family: inherit;\" href=\"https:\/\/www.google.com\/finance\/quote\/SPCE:NYSE\">SPCE<\/a><span style=\"font-family: inherit;\">), sells for 999 times earnings. <br \/><br \/>It wishes to develop space tourism, and a ticket on a future flight costs $450,000.<\/span><\/p><p>Branson, famously launched into space in 2021. <br \/><br \/>This year, the business wants to have some paying guests in space. It made $1.6 million in revenue during the last four quarters. <br \/><br \/>The market value of the stock is $1.75 billion.<\/p><p>Assume that in eight years, Virgin Galactic will have a weekly journey into space with 100 passengers, each paying $450,000 for their ticket. This equates to $2.3 billion in annual revenue.<\/p><p>Perhaps you believe those assumptions are conservative. They appear to be generous, in my opinion. <br \/><br \/>Is the company then profitable? I doubt it, given the costs of rockets, rocket fuel, pilots, and insurance that Virgin Galactic will incur, making SPCE an expensive stock.<br \/><br \/><strong><span style=\"font-size: 24.5px; font-family: inherit;\">Karuna Therapeutics<br \/><br \/><\/span><\/strong><span style=\"font-family: inherit;\">Karuna Therapeutics (<\/span><a style=\"font-family: inherit;\" href=\"https:\/\/www.google.com\/finance\/quote\/KRTX:NASDAQ\">KRTX<\/a><span style=\"font-family: inherit;\">) is the largest firm in terms of market capitalization ($6.8 billion) that trades at 100 times earnings or higher. <br \/><br \/>The company, based in Boston, has developed a drug (<\/span><a style=\"font-family: inherit;\" href=\"https:\/\/www.nature.com\/articles\/s41398-022-02254-9\">KarXT<\/a><span style=\"font-family: inherit;\">) to treat schizophrenia and psychosis associated with Alzheimer&#8217;s disease.<\/span><\/p><p>KarXT is now in late-stage clinical studies. The company will most likely apply for FDA approval soon, with the goal of launching the medicine in 2024. <br \/><br \/>According to its website, Karuna&#8217;s mission is to &#8220;develop and provide revolutionary medications for patients living with psychiatric and neurological diseases.&#8221;<br \/><br \/><strong><span style=\"font-size: 24.5px; font-family: inherit;\">Reata Pharmaceuticals<br \/><br \/><\/span><\/strong><span style=\"font-family: inherit;\">Reata Pharmaceuticals (<\/span><a style=\"font-family: inherit;\" href=\"https:\/\/www.google.com\/finance\/quote\/RETA:NASDAQ\">RETA<\/a><span style=\"font-family: inherit;\">) has debt that is 31 times the amount of stockholders&#8217; equity (corporate net worth), making this an expensive stock. <br \/><br \/>The company, situated in Plano, Texas (the center of oil country), is developing anti-inflammatory and antioxidant medications.<\/span><\/p><p>Antioxidants come in a variety of natural and synthetic forms. They are thought to have promise in cancer therapy, because they shield cells from harm caused by unstable chemicals known as free radicals.<\/p><p>Except for 2014, when it made around $690,000, Reata lost money every year. <br \/><br \/>Losses have been increasing and totaled $311 million over the last four quarters.<br \/><br \/><strong><span style=\"font-size: 24.5px; font-family: inherit;\">Previous Performance<br \/><br \/><\/span><\/strong><span style=\"font-family: inherit;\">Today&#8217;s warning list of expensive stocks trading at 100 times revenue or above is the 19th I&#8217;ve prepared since 2000. <br \/><br \/>Prior lists showed a 12-month decline of 28.0% on average. <br \/><br \/>The Standard &amp; Poor&#8217;s 500 Total Return Index gained 9.8% on average during the same time period.<\/span><\/p><p>Thirteen of the prior lists had a loss, while five had a profit. (When it comes to warning lists, profit is a negative thing.) Fifteen of the 18 lists underperformed the S&amp;P 500.<\/p><p><em>For More Stocks And Investment Related News, Click\u00a0<a href=\"https:\/\/tradersontrend.com\/\" target=\"_blank\" rel=\"noopener\" data-saferedirecturl=\"https:\/\/www.google.com\/url?q=https:\/\/tradersontrend.com\/&amp;source=gmail&amp;ust=1677158629483000&amp;usg=AOvVaw34NbDcE1lCfXtUzBSWOfVp\">Here<\/a><\/em><\/p><p>\u00a0<\/p><p>\u00a0<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>The stock market offers no guarantees but here&#8217;s a near-certainty: investing in expensive stocks that trade for 100 times revenue will lead to disaster. I&#8217;ve warned against 81 of them since 2000. In the next year, 73% of those surveyed lost money and 85% underperformed the Standard &amp; Poor&#8217;s 500 Total Return Index. Most equities&#8230;<\/p>\n","protected":false},"author":1,"featured_media":1636,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[79,237,355,502,554],"class_list":["post-1635","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-newsletter","tag-biotech","tag-expensive-stocks","tag-krtx","tag-reta","tag-spce"],"_links":{"self":[{"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/posts\/1635","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/comments?post=1635"}],"version-history":[{"count":0,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/posts\/1635\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/media\/1636"}],"wp:attachment":[{"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/media?parent=1635"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/categories?post=1635"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/tags?post=1635"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}