Rackspace Hosting (RAX) is one of the top stocks on my radar — and has been a favorite of mine for a couple years now. The company does computer storage for customers who want this stuff outsourced somewhere else (the cloud).
Unfortunately, RAX is always too expensive to buy. And I missed a chance to get in just this Summer — before the stock jumped 60%.
One Year Chart
Here’s RAX as of today. It’s breaking out and I’m not chasing it. The P/E is an astronomical 93. Note RAX was trading in the low-$40s this summer. I should have got in then but was waiting for the stock to go below $40. Snooze you loose. This is a top-flight stock and is always expensive.
RAX reported earnings on 8/7, and the stock gapped up on 8/8 (but closed around its lows). The report wasn’t that great in my eyes — Rackspace met estimates and then 2012 estimates and quarterly estimates proceeded to fall — check it out in the Earnings Table. So that caused the stock to go from $45 to $70? That’s crazy.
Fair Value
This stock is so overvalued that the only thing I can say is I’m missing something here. I don’t know how to value RAX stock correctly and it keeps leaving me behind. Look at the Ten-Year Chart, this is a winner.
Sharek’s Take
Rackspace is one of the best stocks in the world, but it just made a move higher and yours-truly wasn’t smart enough to get aboard when the move started. I don’t know what to think, this stock’s just crazy. We will keep waiting for the stock to be on sale. I don’t think it will happen.
View the Earnings Table here.View the Ten-Year Chart here.
