Tech Stocks Stabilize, But Still Expensive On P/S Basis

After a rough couple of months, momentum stocks like Facebook Inc (NASDAQ:FB) and Tesla Motors Inc (NASDAQ:TSLA) have stabilized, but many argue that tech stocks are still overvalued despite recent corrections. While the number of tech stocks with high price relative to last twelve months sales (LTMS) is above average, it’s set against the backdrop of a market that isn’t that cheap in general.

“2014 has been characterized by an investor style shift from higher valuation, high growth stocks towards stocks with more reasonable valuations,” writes Bernstein Research analyst Toni Sacconaghi Jr, “Despite the pullback, there are still an above average number of tech stocks trading at greater than 8x LTM sales.”