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Avoid These Widely-Hyped Stocks Owned By Millions Of Investors

 April 19, 2012 12:03 PM
 


(By Street Authority) I first warned readers about these stocks last month. Since then, many of them have fallen -- including one that fell 25% and another 27%.

Now, recent actions by some of the companies in this industry have solidified my opinion. I'm still convinced millions of investors are running the risk of losing money in a situation that's eerily similar to one that caused trillions of dollars in losses a decade ago.

Back then, Amazon (Nasdaq: AMZN)shares plummeted 94% from a split-adjusted high of $107 per share to only $6 when the bubble burst. Yahoo! (Nasdaq: YHOO) followed the same track -- dropping 95% from $108 to just $5 per share.

You've no doubt heard the news about recent multibillion-dollar Internet IPOs. "Web 2.0" companies such as Groupon, Zynga, LinkedIn and Facebook are the hot topic of Wall Street right now. The mainstream financial press can't get enough of them. For example, Facebook has dominated the headlines for months, even though it won't go public until May.

Yet despite all the hype, I'm convinced investors will be best served by avoiding these stocks right now...

As I told you back in March, these stocks have traded at levels reminiscent of the technology bubble in 2000. Zynga lost $1.40 per share in the past year, yet until a few weeks ago, the stock was showing a gain since its IPO. Groupon has lost $350 million in the prior 12 months. And LinkedIn, while showing a profit, trades at a price-to-earnings (P/E) ratio close to 900 right now.

Unfortunately, a flurry of news reports coming out about many of these companies paints a grim picture for investors.


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