Overstock.com, Inc. (OSTK): Can This Stock Go Even Higher?

While both Amazon and Overstock.com have similar revenue growth, eBay is lagging, but because of eBay’s margins it trades with a higher price/sales ratio. Since Overstock.com does not have an equivalent to PayPal, Amazon’s 2.2 times sales valuation should be used as the potential for Overstock.com.

Overstock at 0.57 would theoretically allow for upside of 400% to equal the valuation of Amazon. While this may sound unlikely, you must remember that Overstock.com is only this cheap because people wrote the company off as a serious competitor to eBay and Amazon in the past. Now, with its re-emergence, significant gains are likely.

Final thoughts

Overstock.com, Inc. (NASDAQ:OSTK) rapidly fell from 2005 to 2011 as eBay and Amazon emerged as clear winners. However, Overstock.com’s new approach on profitability, and its sudden gains in revenue have changed the landscape. The stock is now surging higher to try and cover the ground that separates it from Amazon and eBay in terms of valuation. If Overstock.com can maintain this growth, and continue to improve, then I see no reason why its large run higher cannot continue. Because after all, it is still cheap compared to its space.

The article Can This Stock Go Even Higher? originally appeared on Fool.com and is written by Brian Nichols.

Brian Nichols has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and eBay. The Motley Fool owns shares of Amazon.com and eBay. Brian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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