3 Stocks With Triple-Digit PEs That Are Still Worth a Look
The price-to-earnings (P/E) ratio is one of the most commonly used metrics to determine whether a stock is expensive or cheap. Generally, the higher the P/E ratio, the more expensive a stock is relative to its earnings. But in times of risk-on sentiment, investors tend to overlook sky-high P/E ratios, betting on growth potential and momentum instead.
However, when sentiment shifts more defensively, stocks with triple-digit P/Es often get hit the hardest. That’s exactly what’s happening right now with Palantir Technologies Inc (NASDAQ: PLTR), Tesla Inc (NASDAQ: TSLA), and Broadcom Inc (NASDAQ: AVGO). Each of these tech giants has a P/E well over 100 and is currently seeing a decent amount of selling pressure.
However, sometimes steep declines create attractive entry opportunities for those willing to bet on the long-term story. Let’s take a closer look at why each of these three stocks could be setting up for a bounce in March.
PLTR: A 30% Pullback But Still Holding February’s Gains
Palantir has had a wild ride this month. After hitting a record high earlier in February, the stock has since tumbled nearly 30%, giving back a large chunk of its recent gains.
Much of the selling pressure stems from concerns about potential U.S. defense spending cuts, which could impact Palantir’s government contracts. And with a P/E ratio of 480, the stock is undoubtedly one of the most expensive on the market.
However, it’s worth noting that Palantir crushed analyst expectations in its early February earnings report, proving that its business momentum remains strong. Additionally, analysts remain bullish, with Loop Capital issuing a Buy rating last week and a $141 price target, which points to a targeted upside of more than 50%. If sentiment stabilizes and buyers step back in, Palantir could quickly reclaim lost ground and push higher into March.
TSLA: A High-Priced Stock That’s Becoming Oversold
Tesla is no stranger to high valuations, but with a P/E of 162, it trades 27 times higher than Ford Motor Co (NYSE: F). Given that the stock has been selling off for many weeks now, this comparison clearly does not sit well with many investors.
Since peaking in December, Tesla has since fallen 30%, dragged down by a weak earnings report in late January that added to valuation concerns. When a stock already trades at a high multiple and then disappoints on earnings, Wall Street tends to react aggressively, which is exactly what we’re seeing now.
However, Tesla may be approaching a turning point. Its RSI reading is 32, which suggests the stock is nearing extremely oversold territory. If it drops just a bit further, it could soon trigger a technical bounce, if not a full recovery rally. For investors willing to look past the valuation concerns and focus on Tesla’s long-term growth story, this pullback could offer an attractive entry point before momentum shifts again.
AVGO: A 20% Pullback With a Big Catalyst Ahead
Broadcom's stock price has dropped nearly 20% since December’s high, including a sharp 10% decline over the past three sessions alone.
At a P/E of 161, Broadcom looks far more expensive than key semiconductor peers like NVIDIA Corp (NASDAQ: NVDA) with its P/E of 51, and Qualcomm Inc (NASDAQ: QCOM) with its P/E of 17, making it a prime target for valuation-based selling.
But there’s one major reason to keep an eye on Broadcom - its track record of delivering strong earnings. Next week’s Q1 earnings report could be a key catalyst that reverses the stock’s recent slide. Adding to the bullish case, Morgan Stanley recently issued an Overweight rating and a $246 price target, suggesting a nearly 20% upside from Monday’s closing price of $207.
If Broadcom delivers solid numbers next week, expect the stock to bounce sharply off its recent lows as investors refocus on its long-term strength rather than its high valuation.
Final Thoughts
Triple-digit P/E stocks are often the first to sell off when sentiment shifts defensive, but they can also be the first to bounce back once the dust settles.
Palantir’s recent pullback may be overdone, Tesla is nearing oversold conditions, and Broadcom has a major earnings catalyst ahead. For investors willing to weather the short-term volatility, these three stocks could be setting up for strong moves in March.
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