PDD - Is QQQ Overvalued Or Undervalued?

• QQQ is generally perceived as tilting very heavily towards Tech Growth. Though many investors believe you can't use traditional valuation metrics to assess Tech Growth, I disagree.
• Invesco's valuation metrics don't include average 5-year EPS growth, a metric that is particularly useful when valuing mature but still aggressively growing stocks like those that dominate QQQ.
• We look at how the average 5 year EPS growth rate relates to P/E of the many QQQ stocks with 5+ years of earnings.
• We also look at how the current price of QQQ stocks compares to analysts' 5-year price targets.
• Valuation is a useful tool but must be used with caution, as crowd sentiment plays such a strong role in QQQ's pricing.

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