Does Price Earnings ratio matter?A great study
By billytickets on Thu, 2007-12-13 09:13
(via www.atfreeforum.com)
This study will change your investing career
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Great comment Kevin check out my link http://www.atfreeforum.com/billyticketswin/viewtopic.php?t=71&mforum=bil... .And become a member and post your link.We have a very concentrated group of high net worth individuals who visit and post .PLEASE FEEL FREE TO POST YOUR LINK .it is clear you are intelligent
The PEG Ratio is used to get a better understanding of a company's stocks is price, than the P/E alone. The PEG Ratio uses the P/E Ratio of a company, and compares it with that company's annual growth rate.
To calculate the PEG Ratio of a company, you'll start with the P/E. After you have the P/E Ratio, you'll need to find the company's annual growth rate. Divide the P/E with the growth rate.
How to use the PEG Ratio - The PEG Ratio of a company will be between 0 and 5. The lower the PEG Ratio, the better. A PEG Ratio of 2 or below is considered good. As with the P/E Ratio, never make a decision to buy a stock based soley on the PEG Ratio. Always throughly research a stock before making the decision to buy.
The PEG ratio is a good way to compare similar companies in the same market segment having different growth rates.
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Kevin
http://investnaked.googlepages.com
Billy- Thats a great measuring stick for how strong a moat is. What other criteria do you use?
Nice little study Billy. It kind of reminds me of some PE studies that Geoff Gannon ran earlier this year, but on a much more focused universe.
How did you decide on ROE of 25% as your cutoff? Why not 20% or 30%? If you sent me a fax of the trades, would you mind me posting them here or maybe on Fat Pitch Financials?
George 25% separates the highest quality stocks from those just slightly above average.This sia agreat dialougue I would rather have people ask me specfic questions to stimulate debate. Thanks for the kind words