Where Do You Buy?

LinkedIn’s (LNKD) business is hitting on all cylinders. Sales this year are growing from around $500 million last year to around $950 million this year. Next year could be a $1.5 billion year.

LNKD stock has a premium price because of the company’s success. When I updated my LNKD research last month, the stock was $99. Now it’s $110. I want to get LNKD but don’t want to overpay. Where do I buy?

One Year Chart

Here’s the one-year chart of LinkedIn. Profits exploded last quarter, but note the P/E is a lofty 77. Geeze, that’s expensive.

Last year when I wanted to buy LNKD, I had an opportunity to get it just-above $60 when it dipped to a support level (you can see this in the ten-year chart). Alas, I passed and LNKD has now shot past $100. Lesson learned.

Now the stock has support at $90. So the low-$90s looks like the price to get in at.

Fair Value

Let’s just be optimistic and say this stock is worth 60 times earnings. That means the 2013 Fair Value is $77. 2014’sFair Value is $128. The stock’s in-betweeen those numbers now.

Sharek’s Take

LinkedIn is growing like gangbusters. It’s worth a premium price, but it’s not a perfect stock. Earnings estimates aren’t jumping, and that’s an ingredient for the worlds top stocks. We are also in a weird stock market where we are given opportunities to get some great stocks on sale. I think we need to wait for LNKD to go on sale — even if the sale price is 70 times earnings.

Hold out for the low-$90s to buy LKND.