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Tickers in this Article: SFSF, OPEN, NFLX, IACI
The year 2010 was a great one for many tech-related stocks. It was also a mixed year for many tech names. While many of the best performing technology stocks ended 2010 with strong momentum, repeat performance in 2011 is not guaranteed. As share prices for several players have gotten into extreme over valuation territory, 2011 may be the year to practice avoidance for some of these names.

IN PICTURES: 4 Biggest Investor Errors

Prices Like it's 1999
SuccessFactors (Nasdaq:SFSF) is a provider of cloud computing software for businesses. While cloud computing is becoming very popular, SuccessFactors has yet to profit from it. Even more so, based on analysts profit estimates for 2011, SuccessFactors trades at an unbelievable 300-times forward earnings.

Though customers love Netflix (Nasdaq:NFLX), at current price levels the stock is not a great buy. Even with continued strong growth in DVD rental subscribers, shares are trading at $184, valuing the company at 70-times earnings and 50-times book value. Shares have had all the momentum in 2010, up nearly 250% during the year. While that momentum could carry in 2011, it's not a safe bet at these valuations. And with the company's recent foray into streaming video, Netflix is now competing with much stiffer names like Google's YouTube.

Dangerous Optimism
While the technology behind its product is both useful and simple, the valuation of OpenTable (Nasdaq:OPEN) is anything but. OpenTable allows patrons to book reservations online with a simple click of the mouse. OpenTable is the leading such company in the space with a significant market share. But Mr. Market has bestowed a $1.6 billion market valuation on a company that barely generates a $100 million dollars in sales and about $15 million in profits. Even if profits doubled for the next two years, the valuation would still be over 25-times earnings. In the meantime, you have strong competition coming from upstarts like UrbanSpoon, an online reservation service owned by IAC/Interactive (Nasdaq:IACI). IAC has over $1 billion in cash on its balance sheet, enough to really put some muscle behind UrbanSpoon.

The Bottom Line
2010 was very rewarding for those tech investors who were lucky enough to be behind the right names. Many of those names now have nosebleed type valuations and are best left alone in 2011. Instead, it's best to keep it simple and look more closely at the lower hanging fruit names in the tech space. (For related reading, take a look at Tech Stocks To Watch In 2011.)

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