On May 2, 2012, I argued that some sub-sectors within technology had seen valuations increase to unsustainable levels. At the time, two of the specific sub-sectors that seemed frothy were social media and cloud. In the social media space, Youku (YOKU) and Jive (JIVE) have seen their share prices decline since the article was posted, LinkedIn (LNKD) has continued to hit new highs. Other public social media companies that were not specifically called out are trading well below their IPO valuations, including Zynga (ZNGA), Groupon (GRPN), Renren (RENN), and Facebook (FB).

Unlike the social media space, mid-cap and large-cap enterprise software (primarily cloud/on-demand software) valuations are sky high pretty much across the board. Below are a number of the larger cloud companies, listed with their market caps, revenues, and enterprise value/revenue multiples. Since many of these companies are only marginally profitable or unprofitable, it makes sense to look at

To put this analysis into context, I have been publishing about overvalued tech companies since March 2011, with updates in July 2011, Sep 2011, and May 2012. If you have the time to parse through those articles, you will see that I use a relatively simple screen in the Screener.co equity research platform to look for companies that are trading at EV/Revenue multiples above 10. One important trend to note is that many of the companies that once made it into this list subsequently dropped off. A small number began growing into their valuations but many were unable to sustain their lofty valuation multiples and lost a considerable percentage of their value over time.

It seems that most of the companies that make up these lists are recent tech IPOs that are capturing investor enthusiasm, and Workday (WDAY) is no exception. However, it is

There has been a lot of discussion recently about whether we are in another tech bubble like what we saw in the late 1990s. Believe it or not, I actually weighed in on this topic on Seeking Alpha in March 2011. I argued that there were localized bubbles in the tech sector and that, rather than the entire sector being overvalued, we were seeing frothy valuation in very specific markets within the tech sector. While many of the companies in that article have seen their valuations decline markedly, I would characterize none of them as cheap today. Furthermore, other recent IPOs have joined the list of public tech companies enjoying bubbly valuations. I believe that my original hypothesis continues to reflect the current public market for tech companies.

To illustrate the point, I used the Screener.co equity research platform to find public companies trading on U.S. exchanges

Analyst recommendations are generally presented on a scale from Strong Buy to Strong Sell. It is possible, however, to look at these recommendations as if they were made on a numeric scale of 1 (Strong Buy) to 5 (Strong Sell). The consensus recommendation would then be the average of all of the analyst recommendations for a particular stock. Since lower numbers represent more positive sentiment, you can screen stocks looking for those with a low number reflecting the consensus analyst sentiment. Using the Screener.co Equity Research Platform, you can also look at the average analyst target price as well as both historical operating metrics and forward looking estimates.

For the purpose of this analysis, we will look for companies with a consensus recommendation of less than 2 (Buy), meaning that at least one analyst recommended the stock as a Strong Buy and the average recommendation is at least better

When looking for value stocks, the Enterprise Value (EV)/EBITDA and EV/Free Cash Flow (FCF) ratios are a set of useful valuation metrics. When using the Screener.co Equity Research Platform, I generally look for companies where both metrics are less than 7. I have been burned by companies with high debt loads in the past, so I usually couple these valuation metrics with a condition that only returns companies whose total debt is less than twice its most recent fiscal year's EBITDA. That usually limits the list of companies to a few hundred out of the 6,000+ that are publicly traded on US exchanges. From that list, I can pick the interesting ones to further research and determine whether or not I am interested in tracking the companies or buying their stocks. Let's run the following screen:

In articles on May 2 and July 1, I looked at the high-flying tech companies that had market caps above $1 billion and enterprise values of more than 10 times revenue. By using our Equity Research Platform and re-running the screen below, we can look at the companies that still trade at that level and look at what happened to those companies no longer on the list.

This screen returns 14 results as of Sept. 5. The company trading at the highest multiple is VirtnetX, an IP holding company that has minimal revenue in the most recent fiscal year. Its astronomical EV/EBITDA ratio of 23,154x reflects that the company is being valued on the theoretical value of its IP and not its recent

One of the screens that we have implemented using the Screener.com Equity Research Platform looks for US exchange-traded companies that have stable or growing earnings and dividends, at least a 1% yield, debt less than its most recent annual EBITDA, a P/E ratio less than 20, and an EV/EBITDA ratio of less than 6. This screen produces a list of companies that offer decent yields while trading at reasonable valuations and having comfortable levels of debt. The full list of conditions are:

This screen

It has been a while since I posted the results of my value screens. As recently as a few weeks ago, few interesting companies were meeting the stringent criteria that I set. With the recent market turmoil, more companies are finding themselves trading at attractive valuations. While the S&P downgrade will likely produce turmoil in the markets on Monday, below are a few interesting companies that might be worth tracking for good entry points as the week progresses.

I looked for profitable companies trading at market capitalization, where 80% of the market cap can be accounted for by the company's current assets less total liabilities. This screen is designed to allow us to focus on companies with a strong balance sheet that can provide some stability in these uncertain times. To perform this screen, I configured the Screener.co stock screener with the following criteria:

I first started covering the lofty valuations in certain subsectors of technology on May 2, where I described it as a localized bubble. In a follow-up article on July 1, I reexamined the companies on the original list and discussed their relatively poor performance along with the arrival of new IPOs that would have made the original list. With each new tech IPO, though, it seems that investors are behaving more and more irrationally. While I cannot say for certain that we are at the peak of the bubble (1999-ish) instead of the beginning (1996-97-ish), I believe the long term outlook for shares in aggregate is highly negative even though they represent ownership interests in compelling (mostly) well-run businesses. Why? Because valuation matters.

Let's look at Zillow (Z) in more detail. With $30.5M of 2010 revenue and a net loss of $6.7M, the company is being valued in

Dividend income investors are attracted to high-yield stocks and relatively simple strategies like the famous Dogs of the Dow have emerged, which advise income-seeking investors to look for established large-cap companies with high yields. However, it is not sufficient to look at yields alone as the only metric of interest. With the introduction of powerful low-cost global equity analysis software like the Screener.co stock screener, we can take a more in-depth look at operating and valuation metrics of stocks to identify attractive investment opportunities. Important questions left unanswered by simpler methodologies include:

1. How stable is this company's earnings and are they likely to remain consistent in the future?

2. Does the company have both a demonstrated track record of improving revenue and earnings and a high likelihood of continuing to increase revenue and earnings in the future?

We can use the following Screener.co formulas to ensure that net

On May 2, 2011, I wrote an article for Seeking Alpha entitled 8 Trendy High Growth Tech Companies with Sky High Valuations. With the recent volatility in the market and new tech IPOs, it makes sense to revisit this theme, see what has happened to companies previously listed, and identify new relevant companies. We will again use the Screener.co stock screener to re-run the screen looking for companies satisfying the following conditions:

As of 6/30/2011, this screen produced 40 results. Many of the companies are speculative companies being valued solely on the basis of their technology, as they have minimal revenue. So, let's add a condition requiring at least $10M of revenue in the most recent quarter, or Total Revenue(I) > 10,000,000.

In response to a question on Quora, I decided to investigate companies in the technology sector whose current trailing 12 month P/E ratio (excluding extraordinary items) is less than its 5-year average P/E ratio (excluding extraordinary items). P/E contraction is to be expected for companies with slowing growth rates, so we should also require that the companies we look for have an expected future earnings per share growth rate greater than its historical growth rate. We can use the Screener.co stock screener to look for companies that satisfy the following conditions:

(Source: Screener.co)

This screen produces 29 results, when applied to U.S. exchange-traded companies, as of 6/28/2011. Sorting the results in order

In a previous Seeking Alpha article, I explored the strange phenomenon where a number of high growth tech companies in emerging markets are trading at sky high valuations, while many of the more mature and slower growth tech blue chips looked downright cheap. We can use the Screener.co stock screener to isolate the highly valued tech companies and delve into the valuation metrics that investors have applied to these businesses. Many are in high-growth emerging markets and trade at substantial valuation premiums to the more established blue chip companies that provide similar services. While it makes sense that higher future growth expectations demand a higher price, some of these multiples just look silly! Let's use the following criteria:

We are limiting ourselves

In the past, our screens mostly relied on objective financial data about companies. However, we can also use the Screener.co stock screener to screen based on consensus analyst estimates. First, we can look at the target price, the price that analysts believe the stock should trade for, and compare it to the most recent closing price. Those stocks with the biggest delta are believed by analysts to be most undervalued. Second, we can look at the consensus recommendation, a score from 1 (Strong Buy) to 5 (Strong Sell) that is an indicator of analyst sentiment about the stock. Obviously, lower numbers are better. Let's limit ourselves to companies with more than $1B of revenue and use the following criteria:

I am more of a traditional value investor and tend to ignore growth opportunities in the absence of unusually low valuation multiples. This analysis is more suitable to growth investors who are willing to pay a premium for rapid and sustained revenue growth. We can use the Screener.co stock screener to find technology companies, traded on US exchanges, with >$100M of annual revenue that have 20+% 10-year compound revenue growth rates, and normalized P/E ratios of less than 20. To do this, we use the following criteria:

We can then rank the results by YoY revenue growth in the most recent year and exclude any companies with <20% YoY revenue growth. That leaves 11

Following the dip on 4/18, we can use the Screener.co stock screener to find companies that are trading near their 12-month lows, but also have low debt and attractive valuation ratios. To do this, we can limit our scope to companies trading on U.S. exchanges and use the following criteria:

We are looking for companies trading at within 5% of their 12-month low, have EV/EBITDA ratios less than 10, and have total debt that is less than twice their most recent annual EBITDA. In addition, we are excluding companies in the financial sector, in China, or not listed on a major exchange. We will also rank companies by annual revenue and

The last time we applied a value screen to the technology industry, the list was understandably dominated by highly cyclical semiconductor companies. By relaxing our valuation metrics a little and taking advantage of the Screener.co stock screener's ability to mix advanced qualitative and quantitative criteria, we can look for non-semiconductor tech companies that are attractively valued by applying the following screen to US-exchange traded companies.

As of April 17, this screen produces 29 results. We can use market cap as our ranking condition and limit ourselves to the top 10 results, which are:

Last time, we looked at high yield, attractively valued, technology companies. While those are more of a rarity than value-priced healthcare companies these days, let's turn our attention today to the healthcare sector to look for some attractive income plays. While there is a lot of uncertainty in the healthcare sector these days, we can look for companies where that risk already appears to be priced into a low valuation multiple. Using the Screener.co stock screener, we can filter for companies that meet the following criteria:

We are specifying a minimum yield of 1%, a maximum EV/EBITDA ratio of 8, a minimum annual revenue of

When investors look for dividend paying stocks, they do not usually think of the technology sector. In fact, there are a number of dividend paying technology stocks with strong balance sheets, healthy yields, revenue growth, and reasonable valuation multiples. Using the Screener.co stock screener, we can limit our search to companies that trade on US exchanges and meet the following criteria:

We are searching for current year yields of at least 0.5%, EV/EBITDA ratios of less than 10, positive revenue growth, and are ensuring that the companies' total debt levels are easily serviceable. As of 4/13/2011, this screen produces 36 results. However, many of these companies are ADRs,

We can use the Screener.co stock screener to find attractive investment opportunities for income-oriented investors. To do this, we first limit our scope to US-markets and then employ the following conditions:

We require at least a 2% forward yield, stable or growing dividends, stable or growing revenue and EPS, manageable debt loads (using a conservative debt threshold of less than 2x annual EBITDA) and an EV/EBITDA ratio of less than 10. Many of the 81 companies returned by this screen, as of 4/12/2011, are foreign company ADRs that may be subject to different dividend tax rates than US-based