Actions speak louder than words, as the old saying goes. So why does the media focus so much attention on what Wall Street says about companies, instead of what it does with them?
Once upon a time, we didn't know what the bankers were up to. Now, thanks to the folks at Finviz.com, it's easy to keep tabs on the stocks that financial institutions buy and sell. And the 180,000-plus lay and professional investors on Motley Fool CAPS can lend us further insight into whether these decisions make sense.
Here's the latest edition of Wall Street's Buy List, alongside our investors' opinions of the companies involved:
(out of 5)
Qlik Technologies (NAS: QLIK)
Cheniere Energy (ASE: LNG)
Northern Oil and Gas (ASE: NOG)
Voyager Oil & Gas (ASE: VOG)
Miller Petroleum (NYS: MILL)
Wall Street vs. Main Street
Up on Wall Street, the professionals think these five stocks are the greatest things since sliced bread. (And by "bread," I mean money.) They've been investing heavily in shares of Cheniere Energy, Northern Oil and Gas, Voyager Oil & Gas, and Miller Petrole-um.
As in ... "Um, does anyone see a pattern here?" With the sole exception of Northern Oil, which is profitable (if just barely), all of these stocks are currently losing money. Yet if you ask Wall Street, they're all likely to be moneymakers in the long term, because of the key roles they could play in slaking a parched world's thirst for energy.
In contrast, the top-rated stock on this week's list has nothing at all to do with oil drilling. It's a pure play on back-to-the-future, circa-1999 Internet-boom e-commerce: Qlik Technologies. While investors seem decidedly unimpressed with Wall Street's other picks, Qlik "clicks" with both Main Street and Wall Street alike.
The bull case for Qlik Technologies
Why is that? To find out, let's begin with a quick intro to Qlik, courtesy of CAPS member aosgood:
Qlik Technologies is a Swedish-based business intelligience (BI) company. Its main product is Qlik View, a streamlined BI program that uses in-memory processing, which does not require the expensive infrastructure the online analytical processing (OLAP) based programs used by the majority of the BI industry. Qlik View is both cheaper and easier to use for potential customers than its OLAP competitors, and this ease-of-use widens the audience for the BI industry as a whole. Also, Qlik View has recently been modified for the mobile interface and is available for tablets around the world.
(That's just the intro to aosgood's book-length review of Qlik, by the way. Read the rest of it here.)
Nor is aosgood the only Fool who's fallen in love with Qlik. CAPS member DanielSparks tells us that right now:
QlikView is the new standard of BI. Its iPad UI will bring in many new clients. Its recent investment in staff will result in more sales. I see this company reaching a $10 Billion valuation at some point.
And Gylesey calls QlikView "the most exciting and accessible BI tool on the market, and still in it's infancy with regards to market share and growth potential."
Pretty heady stuff, I think you'll agree. But perhaps the question investors should be asking here is, "How much is this going to cost me?" Because from where I sit, that's the biggest knock against Qlik Tech today -- its price.
At 450 times trailing earnings, or even 49 times next year's projected profit, Qlik is easily one of the most expensive BI firms on the market today. For comparison, consider that MicroStrategy (NAS: MSTR) -- the firm that arguably started off the data-mining, business-intelligence craze back in the '90s -- costs only 40 times trailing earnings today, and 27 times forward earnings. Industry giant IBM (NYS: IBM) fetches a mere 13 times earnings (11 times forward).
Of course, neither of these companies is expected to grow at anything even approaching the 38% annual compound rate that Qlik's expected to increase its earnings by over the next five years. It's also worth pointing out that Qlik is much less expensive from a free cash flow perspective than the stock looks based on P/E alone. Free cash flow for the past 12 months, for example, approached $14 million -- four times reported earnings under GAAP.
Even so, no matter how I crunch the numbers on Qlik, I cannot escape the conclusion that this stock is dreadfully expensive. Even taking the firm's 38% projected growth rate at face value (despite the fact that free cash flow is down from 2010 levels), even giving the company credit for its net cash position, and valuing it on free cash flow rather than GAAP earnings, I keep coming up with a sub-$600 million valuation on this stock ... that's currently priced in excess of $1.8 billion.
As good as the arguments our CAPS members make may be, as high-quality a company as Qlik is, and as much as I respect the opinions of our team at Motley Fool Rule Breakers, which recommended the stock, I simply cannot endorse Qlik. Not at this price.
Can you? If so, why? Tell us your reasons for investing in Qlik on Motley Fool CAPS.
At the time thisarticle was published Fool contributorRich Smithdoes not own shares of, nor is he short, any company named above. You can find him on CAPS, publicly pontificating under the handleTMFDitty, where he's currently ranked No. 410 out of more than 180,000 members. The Fool has adisclosure policy.The Motley Fool owns shares of IBM and Qlik Technologies.Motley Fool newsletter serviceshave recommended buying shares of Qlik Technologies. Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors.
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