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One more growth stock – Genetech (DNA) – is becoming dirt cheap April 12, 2007

Posted by deminvest in DNA Genetech, growth stock, investment, stock I own, stocks.
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This continues to amaze me. Maybe because of old minded analysts looking back to the past bubble, maybe because there is some irrational fear, a wonder is happening:

growth stock are becoming dirt cheap: their revenue and their profits continue to growth, but stock-price lags.

Something really funny is happening… Simple Math: if earning increase, but price doesn’t, the P/E ratio goes down and down and down…

If this goes on, eventually growth stocks will have same (waiting enough even lower…) P/E ratio of lame stock of companies that don’t grow!

Last week I discussed how this weird funny thing is happening with Google and Ebay (I must not forget to buy a pair more GOOG shares).

I thought it was because the “old big men” are afraid of the Internet… But today I found out Genetech (DNA), the Biotech drug company has a forward P/E of 24 only!

A company that is growing Qtrly Revenue Growth (yoy) 43.40% and Qtrly Earnings Growth (yoy):75.10% and Posted today earnings beating expectations, is such a bargain!

It is also a company that has more cash than debts and has revenue coming from a product that does sell even if the economy slows down: Health!

I am so amazed that I don’t want to lose this opportunity.

I will buy $1000 worth of Genetech (DNA) in the next 5 minutes…

It will be fun to see if in 2 years the “old wise men who know everything about the economy” will keep its price stable sending DNA’s P/E go under 10!

Comments»

1. deminvest - April 12, 2007

I just bought 12 DNA at $81 each investing a total amount of $970. Let’s hope that in a year I’ll still be thinking it was a bargain!

2. I hated it, but I had to sell Genetech (DNA) to Roche « Democratic Investments by the people for the people - March 20, 2009

[…] is what happended to my 12 DNA shares I had bought at $81 each in April […]

3. I hated it, but I had to sell Genetech (DNA) to Roche « Democratic Investments by the people for the people - March 27, 2009

[…] is what happened to my 12 DNA shares I had bought at $81 each in April […]


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