Undervalued Stocks = Low P/E to Growth Ratios Message Board

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Strategies & Market Trends : Undervalued Stocks = Low P/E to Growth Ratios

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To: John Liu who wrote ()	9/7/1997 1:16:00 PM
From: Joe Dancy	of 297

Great thread John. Just discovered it today, although I've been using the growth to trailing PE, (or as you note the inverse PE to Growth ratio) - for 10 years or so now with really good results. I works with both small and large caps, but does especially well with small caps - in fact if you use this stock picking method you should easily outperform the S&P 500 average - something only 1 of 4 mutual fund managers have done in recent years. You don't need to be a rocket scientist to figure out what looks like an attractive investment - although I really look closely to see if the valuation is a reflection of a long term problem or just a short term market abberation. As Warren Buffett notes, Mr. Market is a psychotic sometimes - paying twice what he should in some cases where within 52 weeks he will offer only half what a company is intrinsically worth. Our job as investors is to figure out what is the intrinsic worth, then buy at half price. Here are several candidates for you, and links to why I like each one: Inacom (INAC) 5 year consensus growth of 20% and trailing 4 quarter PE of 16.5 for a growth/PE ratio of 1.2; members.aol.com Southern Electronics (SECX) with a 5 year consensus growth estimate of 20% and trailing PE of 14.5 for a growth/PE ratio of 1.4; members.aol.com Smartflex Systems (SFLX) trailing PE of 13.5 and a 5 year consensus growth rate of 20% for a growth/PE of 1.5; members.aol.com - and Ultratech Stepper (UTEK) trailing PE of 22.5 and 5 year consensus growth rate of 28% for a growth/PE ratio of 1.2 members.aol.com If you want to limit this thread to large caps with a market cap above $500 million let me know - I'll set up a "sister" thread for small caps! Again, great idea and a way to pick up some ideas. Best - Joe

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