The Ludicrous List

Essentially the "stock du jour" of any day of the past year has been anything related to AI. The poster child has been NVIDIA (NVDA) with downright gaudy gains lifting the stock to a market cap of over $2 trillion. Although earnings have been impressive and to a degree supportive of those gains in the stock price, the stock currently trades with a price-to-sales ratio of a lofty 35.94. As we first noted in last Thursday's Closer alongside the debut of our AI Basket, including NVDA there are currently around 50 stocks that have doubled year-over-year, possess a market cap of at least $500 million, and have a price-to-sales ratio of 10 or more. In the charts below, we show the number of stocks fitting these criteria each month over the past 30 years. As shown, while there are currently a decent number of these stocks trading with "ludicrous" multiples and gains, the count is far below what it was at the time of the Dot Com era or even as recently as 2021. With that being said, the collective market cap of the current list of names far surpasses those prior peaks. The major caveat to this, of course, is that nearly half of that is all NVDA. Removing the other three stocks making this list with the largest market caps—Broadcom (AVGO), Eli Lilly (LLY), and AMD (AMD)—the collective market cap of this screen of stocks hardly stands out.

In all, currently, there are a decent but not unprecedented number of stocks trading at high valuations. While the large collective market cap of these names (and hence their impact on market-cap weighted indices like the S&P 500) can perhaps be viewed as more worrisome, that is more a story for a handful of names rather than a broad market frothiness.

In the table below we show the 49 stocks that are currently on the Ludicrous List. Again, these are stocks that have doubled over the past year, have market caps above $500 million, and a price-to-sales ratio above ten. Outside of the four largest of these stocks by market cap mentioned above, there is no stock with a market cap above $100 billion. Additionally, the bulk of these names are in the Health Care industry; more specifically the traditionally more speculative Pharmaceutical and Biotech industry.

(Click on image to enlarge)

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Disclaimer: Bespoke Investment Group, LLC believes all information contained in this report to be accurate, but we do not guarantee its accuracy. None of the information in this report or any ...

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