How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 465.93

+3.3%

Jan 23 9:30 AM EST

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To: Tae Spam Kim who wrote (48324)	8/3/2000 5:12:01 PM
From: David Howe	Read Replies (1) of 74651

Tae Kim, Not a bad analysis, but you're forgetting that MSFT looks fairly valued or even undervalued by today's standards. << The foundation for future stock appreciation is the future growth potential of a company. To value companies many analysts compare a company’s P/E ratio with its future growth rate and expect parity. Currently the Microsoft has a forward P/E of about 40, which puts the future expected growth rate at around 40% a year. >> Take a look at CSCO, ORCL, SEBL, practically any large and successful tech company. They are trading not at PEs similar to their growth rates, but at PEs 3 - 4 times their growth rates. If MSFT grows at 20% they are only trading at 2 times their growth rate. That makes them look like a lot better investment than the other tech companies; by your own logic. Dave

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