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America's Most Overvalued Companies Are...

Tyler Durden's picture


Over the weekend we reported that even Goldman has now highlighted what has been clear to most, but certainly not the Fed, for quite some time: stocks are in such an epic bubble, with many of the key valuation metrics notably EV/sales, off the charts and at all time highs, that even Goldman's own clients are asking "When does the party end?" Never one, however, to tell clients to sell and hold to cash (just think of the lost flow trading commissions, not to mention the potential prop trading losses from frontrunning said flow), Goldman Sachs was kind enough to point out that while buying into undervalued stocks at this record high market junction may be a safe bet, the alternative, going long the most overvalued stocks usually ends in tears.

So just what are these most overvalued stocks? To answer this question David Kostin screens for those Russell 1000 companies with the highest EV/Sales ratios (because in the new normal actual earnings - not the non-GAAP, adjusted, recasted, added back mumbo jombo, and certainly cash flows no longer matter), and finds 40 companies, with a ratio between 10x and 875x (median of 15x compared to the overall Russell's 2x), that fit the bill (and which have returned 10% YTD compared to just 3% for the broader index).

The answer - the list of America's most overvalued companies - is shown in the table below.

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Mon, 03/10/2014 - 19:36 | 4532601 Karl von Bahnhof
Karl von Bahnhof's picture

All of them.

Dollarum delenda est!

Mon, 03/10/2014 - 19:48 | 4532630 National Blessing
National Blessing's picture

America itself is overvalued.  All we produce is war and porn.  Bastards.

Mon, 03/10/2014 - 20:06 | 4532706 DoChenRollingBearing
DoChenRollingBearing's picture

I own some stocks but not nearly as many as before.  I have been a net seller since 1995.  NONE of the stocks I have are on that list (whew!).

America DOES produce some good products.  Cummins produces great engines.  Cat great construction equipment.  Intel good microprocessors.

KOREA, however, produces bearings of great value, USA´s Timekn is losing that battle, at least in mass-produced pieces.


Blog article of my own coming tonight or tomorrow, smile,,,

Mon, 03/10/2014 - 20:27 | 4532780 kaiserhoff
kaiserhoff's picture

Glad to see Faceplant, Twatter, and Linked In all made the list.

Gossip uber alles.

Mon, 03/10/2014 - 20:33 | 4532809 flacon
flacon's picture

What about PCLN and TSLA?

Mon, 03/10/2014 - 20:54 | 4532907 clymer
clymer's picture

haha good to see Fireeye ride the Mandiant Wave. I ain't so sure this should be on the list however.. Who isn't springing for network security these days? Besides, Kevin can roll a crowd with his "pucker factor 5" comments.

Kev - I came from a direct competitor (3 letters)

hire me as a rep in NE

(Fireeye will continue, believe u, me)

Tue, 03/11/2014 - 08:26 | 4533881 fx
fx's picture

Remarkably, 12 out of these 40 are still rated a "buy" . Excluding the 15 CS&NCs, we arrive at a stunning 50% Goldman buy-recos among the most overvalued crap! And one is even a conviction buy - the AMZN equivalent of Solar (SCTY). You really can't make this crap up.

Mon, 03/10/2014 - 21:08 | 4532982 Stuck on Zero
Stuck on Zero's picture

Hey! They are all post-industrial economy companies! 


Mon, 03/10/2014 - 22:57 | 4533345 cynicalskeptic
cynicalskeptic's picture

'Information Technology' and 'Healthcare' predominate...........

wonder why?   two more bubbles in the making?.... nah... Healthcare is getting money thrown at it by gov.

Tue, 03/11/2014 - 10:52 | 4534223 El Diablo Rojo
El Diablo Rojo's picture

Funny you should mention these names kaiser.  As of 7:50 am pacific time Twitter (twatter) is now up $1.35 to 55.23 +2.51%.  I'd go broke trying to short any of these ticking time bombs. Absolute madness.

Mon, 03/10/2014 - 22:54 | 4533333 rosiescenario
rosiescenario's picture

How's SKF doing? Hoover?

Tue, 03/11/2014 - 03:21 | 4533675 NidStyles
NidStyles's picture

I still will only use Timkin on all of my rebuilds. Replaced the wheel bearings on my Civic the other day, used a pair of OEM spec'ed Timkins. 

The US still makes some rather good things in the area of software. The best software in the world still comes out of the US.


Mon, 03/10/2014 - 21:05 | 4532954 mrpxsytin
mrpxsytin's picture

I've said this before. America is actually becoming the world's bitch. You are locked in an S&M relationship with the rest of the world. You started out in control, but now the subs are purposely being naughty so that you punish them. You keep hitting us and we keep begging for more! You have been topped from the bottom. The subs are getting more out the relationship than the dom. Please don't stop!! 

America has decided to play parent to the world. And now there's a bunch of naughty kids antagonising that parent. You've taken personal responsibility away from the children by controlling their resources, monetary systems, and political systems. The more 'successful' you become the harder you make it for yourselves. 

Tue, 03/11/2014 - 03:55 | 4533690 dark pools of soros
dark pools of soros's picture

and neither one pays for itself

Mon, 03/10/2014 - 19:48 | 4532633 Fredo Corleone
Fredo Corleone's picture

Forty overvalued names, and two are a "Sell."

Mon, 03/10/2014 - 20:06 | 4532712 BigJim
BigJim's picture

Yeah, seeing as this is 'research' from Goldman, I'm guessing the trick is to buy their sell recommendations, and short their 'buy' recos?

Tue, 03/11/2014 - 03:29 | 4533677 NidStyles
NidStyles's picture

No the real trick is to own your own stock as a Goldman employee and pay yourself fat bonuses for making bank on commissions for trades that never actually occurred. 


The big banks should occupy the top however many slots on this chart before any of these companies are even mentioned. The chart is BS and it's meant to keep you ignoring that the banks are publically traded as well. All of that debt is held by the bankers, that means when the music stops they are the ones left holding the bag. They are the ones that are truly screwed. They have us peons out here playing the music for them, and honestly all that needs to happen is that the peons stop playing it and tell them to go kick rocks. 


That's why they release BS like this, to keep the muppets interested in what is a good stock and not while getting you to ignore the very nature of the situation, that it's all a lie. None of those paper certificates are worth the value of the digital ink that doesn't even exist to print them out on.

Mon, 03/10/2014 - 20:37 | 4532793 kaiserhoff
kaiserhoff's picture

It makes some sense the Research and Development shops or even wild catters would make a list like this.  It's the large companies with a well established brand that should give us the heebie jeebies.

It's a damn shame you can't short anything.

Mon, 03/10/2014 - 20:07 | 4532722 booboo
booboo's picture

Take all them there 1's and 0's that this plastic fruit wrap is made of, pile them up and see if they will burn, if they don't they ain't worth a puff of shit in a Kansas tornado.

Mon, 03/10/2014 - 20:55 | 4532917 20834A
20834A's picture

OT but... http://www.military.com/daily-news/2014/03/07/pentagon-considers-401k-like-retirement-plans.html?ESRC=dod.nl

"The letter you are speaking of from Deputy Secretary Fox was options that we agreed to and the commission wanted to consider for different ways at getting to the retirement benefit, " Pentagon Press Secretary Navy Rear Adm. John Kirby said during a Friday news conference. "And that's all they were. They were not proposals. They were not recommendations. We did not side with one over the other. But we provided them as I understand they wanted our input."

'wanted to consider different ways at getting to the retirement benefit' Sounds like a Fruedian slip, heh heh.

Mon, 03/10/2014 - 19:45 | 4532617 OwnSilverPlayMusic
OwnSilverPlayMusic's picture

And most of them are rated fucking BUY.  Goddamn i hate this world

Mon, 03/10/2014 - 20:03 | 4532699 Kreditanstalt
Kreditanstalt's picture

Not "this world"...the f--king governments with their free money for friends...

Mon, 03/10/2014 - 20:46 | 4532881 OwnSilverPlayMusic
OwnSilverPlayMusic's picture

Thanks for that.  You're right

Mon, 03/10/2014 - 19:46 | 4532622 Shizzmoney
Shizzmoney's picture

4 of these companies are clients at my job #lol

Mon, 03/10/2014 - 19:54 | 4532660 DeadFred
DeadFred's picture

And I have children working at two of them, with unvested stock options valued at these absurd levels. Well at least they have jobs.

Mon, 03/10/2014 - 19:52 | 4532651 A Lunatic
A Lunatic's picture

Wow, who would have ever expected to see twitter and facebook listed there.........??

Mon, 03/10/2014 - 20:02 | 4532697 Mr Pink
Mr Pink's picture

Even the millions of fake users couldn't keep them off this list

Mon, 03/10/2014 - 20:07 | 4532717 BigJim
BigJim's picture

Yes, and they're a 'buy', what's more.

Mon, 03/10/2014 - 19:56 | 4532670 FieldingMellish
FieldingMellish's picture

Future Dow constituents.

Mon, 03/10/2014 - 19:56 | 4532673 1fortheroad
1fortheroad's picture

I see facebook in their, how are they Overvalued?

They only have a 180 billion market cap.

I have heard they have over 300 billion subscribers.

And they create high paying jobs like these.


Mon, 03/10/2014 - 19:59 | 4532684 Johnny Cocknballs
Johnny Cocknballs's picture

I suspect Facebook will be creeping up this list. 

It's a GS "buy," really? 

Is that because everyone on FB's management team is a blood relative of a top exec at GS? 

Zuckerturd is a thief, and were he not connected, he would have been disgorged of his ill-gotten technological gains.



Mon, 03/10/2014 - 23:38 | 4533359 cynicalskeptic
cynicalskeptic's picture

Facebook is Big Brother's 'self reporting' spy system.  Soon you'll be a 'terrorist' suspect if you're NOT on Facebook.    Absolutely astounding at how much info about themselves people will post on Facebook - along with lots of photos to build a facial recognition database.....

A surprising number of companies like this got venture capital money from firms tied to our national intelligence agencies.

Mon, 03/10/2014 - 20:04 | 4532704 Babaloo
Babaloo's picture

The next time Goldman calls a market top will be the first time.

Mon, 03/10/2014 - 20:07 | 4532719 ncdirtdigger
ncdirtdigger's picture

IT, healthcare & energy. Hmmmmmmm

Mon, 03/10/2014 - 20:31 | 4532798 kaiserhoff
kaiserhoff's picture

Reversion to the mean, mayhap?

Mon, 03/10/2014 - 20:09 | 4532726 nic_zh
nic_zh's picture

I think there are a few good companies in there. 3D printing is promising.

Mon, 03/10/2014 - 20:22 | 4532761 HaroldWang
HaroldWang's picture

Those smart folk on the TV tell me that this is good and they'll grow into that value. So just buy 'em and relax. Nothing can possibly go wrong.

Mon, 03/10/2014 - 20:26 | 4532776 El Hosel
El Hosel's picture

The Fed is Buying the dip and the numbers... Come all Ye Faithfull, bring the Mothers Milk and Fairy Dust.

Mon, 03/10/2014 - 20:31 | 4532800 overexposed
overexposed's picture

Tyler, if I'm reading you between the lines correctly -- you're suggesting that these are the BUYS OF THE CENTURY, are you not?

After all, as Goldman says, their traders are preparing to do (the opposite of).

Mon, 03/10/2014 - 20:37 | 4532829 highwaytoserfdom
highwaytoserfdom's picture

Wow salesforce with option accounting was my number one..  Methodolgy would be interesting. I had it at 38b ev 2.3b sales  16,84....   with real stock option accounting problem. CRM

Mon, 03/10/2014 - 20:38 | 4532842 i_call_you_my_base
i_call_you_my_base's picture

I can't believe TripAdvisor still exists.

Mon, 03/10/2014 - 20:43 | 4532868 J Pancreas
J Pancreas's picture

Since the actual production of 'things' was outsourced years ago to Fallout-level wastelands in the East, the great American juggernaut of propaganda is to have us believe Twatter and Face-sit are the new stoic American companies. 


I saw on the idiot box today the MSM is asking if retail should invest in TSLA at these levels. The top is here.

Mon, 03/10/2014 - 21:02 | 4532955 Ban KKiller
Ban KKiller's picture

Instead of investing in R and D take the cash and buy back stock. BAM. More earnings per share!

Long term? What are you talking about?

Mon, 03/10/2014 - 21:12 | 4532997 ChargingHandle
ChargingHandle's picture

Well all Facebok has to do is bring in a few new click farms in Bangladesh...and Wala...problem fixed for them. I will laugh my ass off when they get exposed for what they really are. 

Mon, 03/10/2014 - 21:14 | 4533003 Spungo
Spungo's picture

I still don't understand why Goldman goes out of their way to fuck their clients. There's always a sale somewhere, so why would they put buy ratings on the most overpriced garbage? Couldn't they recommend something that will benefit their clients? They could even front run that trade.

Mon, 03/10/2014 - 23:04 | 4533367 cynicalskeptic
cynicalskeptic's picture

During a garbage strike - with trash piling up, people found that if they wrapped up their garbage like a present and left it in an unlocked car, someone would steal it.   Voila - that garbage is now someone else's problem.   Instead of PAYING to get rid of trash, someone VOLUNTARILY took  ('stole') it.

Goldman's getting PAID by the people getting stuck with their trash - a 'win-win'.

Mon, 03/10/2014 - 22:47 | 4533321 rosiescenario
rosiescenario's picture

Surprised to see both Visa and MasterCard on this list.


With the decline of the consumer one would think their future is not too bright, so why the high valuations???

Mon, 03/10/2014 - 23:06 | 4533376 cynicalskeptic
cynicalskeptic's picture

Usurious interest rates on debt - so they can afford a few defaults AND huge amounts of information on consumer spending habits.  

Mon, 03/10/2014 - 23:07 | 4533377 mccvilb
mccvilb's picture

Hey, it's Goldman. You're projecting expectations of ethics and morality onto the ultimate icon of greed, the Vampire Squid? (Thanks for that, Matt.) They obviously have been successful attracting like-minded clients.

Tue, 03/11/2014 - 00:39 | 4533548 motorollin
motorollin's picture

Since when are V and MC in the IT sector?

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