TO ALL,
You probably already know this fundamental info, but here goes anyhow for whoever might be interested:
First- Hi Ave PE(5 yrs) Lo Ave PE today's PE(approx.)
TMO 26 17.5 26
THI 31.5 20 22 BUY
TMD 67.2 34 27 BUY
Second-Ave Growth based on earnings compared to todays PE(it is common to compare these two, PE should be at or below growth rate to be in buy range):
Growth Ave(5yrs) todays PE
TMO 18.4% 26
THI 35% 22 BUY
TMD 41% 27 BUY
Third-Comparing '96 earnings growth rate to ave Growth rate '96 rate 5 yr ave rate
TMO 21.6% 18.4%
THI 75% 35%
TMD 55% 41%
Obviously, the above numbers only tell part of the story on these 3 stocks, but if you were to just look at these numbers, would you not agree that TMD and THI look better for being in a buy range? The third comparison, my own concoction, just says that maybe there is either an acceleration of growth of all three of these companies or it just happens to be a good year. But look at THI. It is a very consistant company, beyond it's initial growth path of several years ago, but it appears to be accelerating in growth. If you go back and look at each year's growth rate over the last 5, you get 24% 22% 26% 27% 75%! Is it a fluke? But when you add the present PE to the mix, I believe you are looking at a company with tremendous upside potential! TMD, in my opinion, is still on it's initial growth path, and is not so consistant as THI. Therefore, maybe it isn't as easy to look at the numbers I have shown and be so emphatic about what it may mean. However, it appears to have tremendous upside potential as well; it appears to be continuing on the growth path it has been on, and today's PE is very near it's low ave. Again, THI looks very good to me because it has that upside potential without the added risk of the faster growing TMD. I would also add that TMO may be in a buy range as well, even though the numbers I have provided do not necessarily indicate that. the growth rate in '96 does look good when compared to the ave, however. I stand to be corrected.
EDWIN K. |
