Medarex has had an annual loss since it became a publicly traded company in 1991, so I can't calculate its steakhouse or malt-shop PE ratio.
COR Therapeutics Inc, a stock that I have sold short in some client accounts, makes drugs for treating or preventing severe cardiovascular diseases. Last year, the South San Francisco-based company posted a loss of US$16.7 million on sales of US$104.7 million.
COR's earnings for the past four quarters totaled US$0.04 a share and the stock sells for US$21.79, so the PE ratio is 545. The company has not posted an annual profit since it went public in 1991.
Analysts expect COR to earn US$0.14 a share this year and US$0.72 a share next year. If they're right, the stock is at 30 times steakhouse earnings, which have yet to be served up.
Silicon Laboratories Inc, a maker of specialized integrated circuits used mostly in telecommunications, trades at 493 times trailing earnings of US$0.06 a share.
The steakhouse PE ratio is 67, based on last year's earnings of US$0.44 a share. The malt shop PE ratio can't be calculated because the company has been publicly traded only since March of last year.
Most of the companies in the sky-high six are good companies, and some are even excellent. But I doubt there is an outstanding stock in the bunch. My guess is that, as a group, they will perform substantially worse than the overall market.
I intend to track them and report on the sky-high six at least twice a year.
John Dorfman is president of Dorfman Investments in Boston. The opinions expressed are his own.
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