Stocks only a short could love
Ultimate, which sells payroll and human resources software, has a P/E of well over 800. The tech company saw its shares rise to about $51 from about $32 over the past six months. Executives at the company denied a published story that it's for sale.
Even if it is acquired, I doubt that Ultimate Software will fetch a fat takeover premium. The stock already sells for fancy multiples of book value (20) and sales (almost six). Yet the company lost money in seven of the 10 years through 2009.
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(Disclosure note: Mr. Dorman has no long or short positions in any of the stocks discussed in this week's column. The spouse of one of his partners works for Vertex.)