I have been a fan of the P/E (Price/Earning) ratio for investigating overlooked value stocks. Since many internet stocks (esp IPO's) do not any positive earning, there is no PE. If Companies such as Yahoo and Ebay break into positive earnings, the tradition valuation method can create a PE that is over 1000.
I proposed a new "P/e" created for evaluating quarterly earnings when comparing other internet/hitech stocks.
The "e" represents the mathematical symbol "e" or (2.7) with quarterly earning as the exponential. For quarterly earning of (0.01), the "e" would be {2.7 to the -0.01 power} or 0.990.
This is how it works for some well known stocks.
STOCK Recent$ Qeps P/e
AOL 84 .13 74.3
AMZN 90 (.51) 150
ATHM 42 (.02) 42.8
EBAY 84 .02 81.5
YHOO 128 (.01) 115
EGRP 25 (.10) 27.7
SEEK 31 (.36) 44.9
DELL 39 .16 33.3
CSCO 61 .19 50.8
ORCL 36 .36 25.1
CMGI 77 (.27) 101
MSFT 85 .40 57.0
ORCL and EGRP are notable for the low P/e. When I bought ORCL ($24) in May the P/e was an amazing 16.7.
If we take the NASDAQ 10 % gainers for today
Stock Share$ Qeps P/e
CBDR 7 11/16 (.25) 9.30
FARO 5 1/8 (.01) 5.17
ASYM 6 1/16 (.14) 6.97
CLAI 6 7/16 (.67) 12.5
FMXI 9 7/16 .23 7.55
STMP 35 (.53) 59.5
GOTO 29 3/8 (.20) 35.9
ICGE 28 5/16 .27 21.7
BTIC 5 1/2 .10 5.00
IREG 20 3/8 (.19) 24.8
In this group BTIC, FARO, FMXI are notable for their low P/e.
The history of a company's P/e is important as well as the P/e of that stock's competitors. Any comments would be appreciated. - Jack |
