CTRP

[James282]

ctrip.com, commonly referred to as the "Expedia of China," currently a monster gainer in my portfolio - but for my taste the valuation has gotten a little out of control. Current p/e of 72, forward p/e of 52 assuming optimistic growth. The thing is, this company is going to need to keep growing like crazy to justify current prices and it seems like there will almost have to be a correction sometime soon. My question is largely tax-based, as I think this is indeed a great company, but it is basically a 100% gainer for me, all in long term cap gains, so does anyone familiar with this company think it's time to take a little off the top?

James

[ayamaguc]

A lot depends on context and the rest of your financials. Nothing wrong with taking profits. Your intuition may be right on. Or the risk profile may have exceeded what you're comfortable with.

How about you take half off and think about it some more?

Or if you have 200 shares, then sell 100 and buy a long-dated option, or put together a ratio call spread
http://www.voptions.com/bullish_stra...all_spread.htm

?

[stinkypete]

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forward p/e of 52 assuming optimistic growth

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if this is true, how could it not be overvalued? unless you're some expert on timing the market, i don't see any reason to keep holding.

i guess its possible that they have some ridiculous amount of cash or there's some other reason it deserves that valuation, but i'll assume not since you didn't mention it.

[James282]

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forward p/e of 52 assuming optimistic growth

[/ QUOTE ]

if this is true, how could it not be overvalued? unless you're some expert on timing the market, i don't see any reason to keep holding.

i guess its possible that they have some ridiculous amount of cash or there's some other reason it deserves that valuation, but i'll assume not since you didn't mention it.

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Well, they do have a ton of cash. In the fastest growing market in the world. And they have a good moat, and theoretically if China develops a proper middle class like the US it will really really explode. They grew 48% quarter of quarter, so it's not like companies from the dot.com bubble or anything. But still, it seems like it's riding the wave of optimism. I know the company pretty well, but was wondering if others on here knew it well also and had any bearish opinions.

James

[hawk59]

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forward p/e of 52 assuming optimistic growth

[/ QUOTE ]

if this is true, how could it not be overvalued? unless you're some expert on timing the market, i don't see any reason to keep holding.

i guess its possible that they have some ridiculous amount of cash or there's some other reason it deserves that valuation, but i'll assume not since you didn't mention it.

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something can be woth 10,000x earnings if it is growing and will continue to grow fast enough. it's just a function of your discount rate and your growth rate.

[stinkypete]

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[ QUOTE ]
forward p/e of 52 assuming optimistic growth

[/ QUOTE ]

if this is true, how could it not be overvalued? unless you're some expert on timing the market, i don't see any reason to keep holding.

i guess its possible that they have some ridiculous amount of cash or there's some other reason it deserves that valuation, but i'll assume not since you didn't mention it.

[/ QUOTE ]

something can be woth 10,000x earnings if it is growing and will continue to grow fast enough. it's just a function of your discount rate and your growth rate.

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obv. but 72 -> 52 isn't all that fast, especially if its an optimistic estimate as he said. and i would assume growth is slowing. i haven't really looked into this company though so i won't say more.

[zimmer879]

Interesting company, solid financials, great growth, and you get the whole China thing, but it does look overvalued at this point. Analyst growth estimates are at 35% per for the next 5 years giving it a PEG of about 2 and virtually no room for error.