NEW YORK (TheStreet) -- Internet stocks have been on fire recently following surprisingly robust earnings reports.
Back on June 6 I wrote, "IPO Report Card: Ups and Downs of Internet IPOs" in which where I showed the performances of nine Internet companies that have gone public in recent years.
I showed the dramatic ups and downs of these stocks, including those that were considered to be failures as IPOs.
My updates today explain how some of these stocks have become parabolic recently. Seven of the nine stocks have logged two-month gains of between 26.2% and 96.7%. These companies went public between May 2009 and May 2012.
At ValuEngine we have enough data to provide valuations and ratings. Three stocks are undervalued, and four are overvalued by 40.8% to 96.7%, reflecting that price momentum may have gone too far. This predicament often occurs as bubbles in the equity markets are inflating.
The Nasdaq set a new multiyear high at 3694.18 on Monday, which is well within the dunce-cap dome of the March 2000 tech bubble, as shown in the following monthly chart.
The March 2000 high was 5132.52, and the October 2000 low was 3026.11. In March 2000, I reiterated a prediction that the Nasdaq would fall into the 3500 to 3000 range by the end of that year. Today I show a quarterly value level at 3284 with a monthly pivot at 3663 and a semiannual risky level at 3759.
My annual value level at 2806 is well above the 120-month simple moving average at 2388. The upside to the risky level is 1.8% and the downside risk to the annual value level is 24%.
Back on June 6, three of the nine stocks had buy ratings, and six had hold ratings. Today there are two buy-rated stocks, four hold-rated names, and three sell-rated stocks. The sell-rated names are indications that these stocks have moved too high, too fast. Having a sell rating is not a recommendation to go short, but is a signal to take profits.
All nine stocks are above their 200-day simple moving averages, reflecting the risk of reversion to the mean.
My proprietary analytics requires nine years of price data, which explains why many of these stocks do not have risky levels.
The computer and technology sector is 22.2% overvalued. On June 6 it was 20.8% overvalued. The Internet software industry is 18.5% overvalued. One June 6, it was 3.1% overvalued. The Internet content industry is 24.2% overvalued. On June 6 it was 20.9% overvalued. And the Internet services industry is 27.8% overvalued. It was 21.6% overvalued on June 6.
Stocks remain under a ValuEngine valuation warning, with 77% of all stocks overvalued.
Reading the Table
OV/UN Valued: The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage.
VE Rating: A "1-Engine" rating is a strong sell, a "2-Engine" rating is a sell, a "3-Engine" rating is a hold, a "4-Engine" rating is a buy and a "5-Engine" rating is a strong buy.
Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage over the last 12 months.
Forecast One-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.
Value Level: the price at which to enter a good-'til-canceled limit order to buy on weakness. W=Weekly, M=Monthly, Q=Quarterly, S=Semiannual and A=Annual.
Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.
Risky Level: the price at which to enter a GTC Limit Order to sell on strength.
The IPO for Bankrate
At the time of publication, Suttmeier had no positions in stocks mentioned.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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