Why Zillow and Bank of Internet Are "Rule Breakers"

On Friday's edition of Where the Money Is, Motley Fool financial analysts Matt Koppenheffer and David Hanson took a look at some of The Motley Fool's newsletter services and the formal stock recommendations made there, to tell investors whether or not they agree with the analysts' picks.

In this segment, the guys look at the Rule Breakers service, and the most important characteristics of a stock that give it the Rule Breakers distinction. They then discuss the difference between a stock that is actually overpriced versus a stock that only appears overpriced, and highlight Bank of Internet (NASDAQ: BOFI  ) and Zillow (NASDAQ: Z  ) as two stocks from the financial space that may seem expensive at first blush, but are in fact two stocks that the guys see as having a huge growth runway ahead.

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  • Report this Comment On March 31, 2014, at 11:17 PM, erich69 wrote:

    The flaw with using Price/Book regarding comparing BOFI to other banks is that it lacks the physical branches that all other banks have hence raising the ratio. So you are not comparing apples to apples by using only this metric. On another note, having a high price/book ratio may signal a short term overvaluation in the banking industry, but this is the same issue as all high growth companies outside the banking industry commanding high p/e ratios. Investors are willing to pay more for a high growth company with a large opportunity like BOFI based upon the belief that larger amounts of profit will be coming in the future.

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