Hi,
I was thinking to invest in the S&P500 index instead of cherry-picking stocks (through Ireland ETF). The reasons are that my country doesn't have a tax treaty with US and to lower the risk of individual stocks.
But by looking into S&P index constituents there are many stocks that looks overvalued to me (based on PE ratio, I will assume that 25PE is a reasonable PE for value stocks for a time to come):
- AMZN PE 62.25 - its earnings would have to increase 250% to reach PE 25. Through which business segment? Internet sales - with covid over, people would spend more time in brick and mortar shops, expansion possibilities in new countries is very limited as there are local players. Prime Video? Look at Netflix - new users do not add so quickly, I'm expecting this segment to have a low earnings increase. AWS - there are more competitors and many business are not so fond of paying to Amazon much more than what they are currently paying, I'm estimating possible growth of 10% Y2Y in the next 5 years.
- TSLA - while it has a strong brand the valuation that is higher than VW and Toyota combined is questionable. The graveyard is full of people who shorted TSLA although
- V (Visa Inc) - PE 54.81 - debit card payments are now the norm even in third-world countries outside of the world. To reach 100% growth in earnings I think you'll have to wait long.
- Mastercard - see Visa Inc
- NVIDIA PE 83.98 - when crypto mania is over, graphic cards would not be such a great business, compare this to Samsung's PE 21.35, Nintendo's PE 16.41 or TSMC 28.68
- Adobe PE 42.26 - Adobe to grow more than Microsoft? Good luck with that. This is a business software company, compare that with SAP PE 25.27. There are some labor requirements that give Adobe an advantage so my guess is that 35 PE would be reasonable
Obviously, I'm assuming some things wrong, but did I underestimate all these companies?
Submitted May 07, 2021 at 01:45AM by AdamovicM https://ift.tt/3xSPcsH
