META Platforms (META) - A Great Tech Company Trading Slightly Overvalued

META Platforms INC (META) is a great tech company trading slightly overvalued as of February 15, 2024.  According to Yahoo Finance, "Meta is the world’s largest online social network, with nearly 4 billion family of apps monthly active users." As of 2024, I believe the majority in the investment community consider META to be a part of the "Magnificent Seven" tech companies in the S&P 500. According to Slickcharts, it is ranked number five as a percentage of portfolio holdings in the S&P 500 as of February 15, 2024. 

On the FASTgraphs historical chart for META (below), the stock price on February 15th was trading at a blended P/E ratio of 31.20, which is rather high in comparison to the median P/E ratio for the S&P 500 (back to 1871) of 17.88 (ref. gurufocus.com).  The S&P 500 P/E as of this writing was 27.63, less than plus one standard deviation, but still well above the historical normal. On the chart below, the black line represents the META stock price.  The orange line is the fair valuation line. The stock price on February 15th was trading very slightly above the orange line, so META is slightly overvalued at $484.03/share.


In the Fastgraphs chart below, the EPS growth for META is projected to be strong through 12/31/2026. 

The red line on this chart indicates that a $10,000 investment (with dividends reinvested), as of February 15, 2024 and ending December 31, 2026, could generate a total rate of return (ROR) of 63.76%, with an annualized ROR of 18.72% given the stock was to trade at the orange P/E valuation line (P/E=G) which represents a strong growth company. This is the consensus forecast from analysts covering the stock calling for 20% adjusted operating earnings growth through December 31, 2026 with a P/E of 30. In the lower right section of the chart, one can see the one and two year accuracy from analysts.    

Lastly, a Fastgraphs performance chart from 01/04/2013 to 2/15/2024 is shown for META below: 

The compound growth rate for META of 28.92% slayed the S&P 500 compound growth rate of 13.73%.  I like to search for great companies trading at near reasonable valuations or that are undervalued compared to their historical norm, that generate compound growth rates in the double digits. I also like to find companies that historically beat the S&P 500 growth rates, have solid management teams, excellent vision for growth, and are projected by analysts to have solid EPS growth going forward.  

I think META would be a reasonable buy for a small initial position (or adding to a current position) at or below $480/sh and a potentially good buy at or below $350/sh. However, this offers little margin of safety and one may be able to initiate or add to a position when the price drops below the orange valuation line.  Another option is to buy a few shares now and dollar cost average down if the price drops. 

This blog article is not a recommendation to buy META shares.  As always, anyone investing in the stock markets assumes their own risk and should perform their own due diligence and research before investing in any stock, ETF, or other investment.  There are many people that would benefit more with a competent, reputable financial advisor if they are not willing to devote the extensive time and dedication to stock research. 

Here are a just a few external links that may be of interest for further research on META: 

Thank you for reading and feel free to comment on this blog. 

Disclaimer: This blog has been created for sharing my personal investment ideas only. I do not receive any compensation for this blog or the content within. I am not an investment advisor or professional. This blog is my own personal opinion and is not meant to be a recommendation of the purchase or sale of any stock or ETF. Please do your own due diligence and research before deciding to purchase any investments of your own.

Comments

Post a Comment

Popular posts from this blog

AMAT (Applied Materials) is Trading at near Fair Valuation for those in Search of a Great Semiconductor Company!

Image
This morning, August 25th, 2025, I purchased a small amount of shares of AMAT.  The Fastgraphs chart below shows that the stock is trading at near fair valuation.  Thus, we have a great semiconductor company trading at near fair valuation.  If the stock falls more, I will add to my share count and dollar cost average down.     Here is a screen shot of the past 13 year performance of AMAT versus the S&P500:  Notice on the 13-year performance screen shot that with dividends reinvested, a $10,000 investment in October 2012 would be worth $184,000 today versus $56,000 for the S&P500.  AMAT had a compound growth of 25.51% versus a respectable 14.51% on the S&P500.  AMAT's dividend growth rate and compound dividend growth rate were 13-14% which is solid.   I am always in search of great companies that are trading at a fair valuation that have a history of thrashing the S&P500.  They can be difficult to find bu...
Read more

Updated Price Targets for Amazon (AMZN) through 2027

Image
    Although Amazon (AMZN) is minus 1% YTD in 2025 as of close on 6/26/2025, it's 1-year performance was +12.14% and 5-year performance was +61.26%, nothing too glamorous.  Individual investor gains or losses will, of course, depend on what price(s) they bought shares at.  Valuation is hugely important when it comes to investment gains/losses.   When valuating Amazon, the Adjusted Operating Earnings (a metric used for most stocks) does not typically correlate well historically with the stock price.    AMZN:  Price Correlated with Adjusted Operating Earnings       Instead, a more reliable valuation metric is the price correlated with operating cash flow (OCF) seen in the chart below:  AMZN:  Price Correlated with Operating Cash Flow (OCF)       Since December 2022, the stock price has been following closer to the black line (current valuation), as opposed to the Normal P/OCF (blue line) or the Fair Valu...
Read more

A Few Excellent Stocks Trading at or Near Fair Valuation that are Worth Adding to Positions.... [AMZN, AMAT, NVDA]

Image
 I will be adding modestly to my current positions in the following stocks that are trading near fair valuation that have strong growth projections:  Amazon [AMZN], Applied Materials [AMAT], and Nvidia [NVDA].   My goal is to buy high quality growth stocks (especially tech/AI related) at a reasonable price that have significant upside potential over the next 2-5 years and longer.  Regarding Amazon, here is a 10 year chart of it's performance with analyst projections through FY2027:  The black trace is the history of the stock price up to the present.  The price has generally been following the black "current valuation" line pretty well.  The red line is a projection for the next two years given the stock price continues to follow the "current valuation" line.  It shows potential for the stock to hit $365/sh by the end of 2027.  This is very close to the numbers from my June 27, 2025 article on AMZN.  This would represent a total ret...
Read more