New Constructs currently has RHT on its monthly list of "most dangerous stocks," on the basis of profitability, earnings and valuation that Trainer considers to be out of whack. New Constructs sifts through balance sheets, looking at footnotes and other items to determine true economic earnings
And in what many have called a traders' rally -- where leading stocks haven't necessarily had the strongest financials -- there's always the worry of how much a change in the tides can hurt. With RHT trading at more than twice the market's P/E ratio, you have to be concerned that the stock will take a dunking if the tide were to run against it.
Said Wilsey: "The numbers say Red Hat is way too expensive, that you are paying way too much right now. That doesn't mean it's going to drop like a stone -- in fact, someone selling now could be getting out early -- but it means that there are companies out there that are good buys in this market, that are priced reasonably and have solid growth potential. Right now, Red Hat isn't one of them."
I guess someone forgot to read this
