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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!
LRCX 159.33-1.8%Nov 7 9:30 AM EST
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To: Jerome who wrote (9731)4/17/2001 11:48:14 PM
From: Q.  Read Replies (1) of 10921
 
p/e's can be used successfully with cyclical stocks if you average the denominator over multiple years, to include a full cycle.

Hardly anybody bothers to do this, though. Everybody just uses a denominator averaged over exactly 12 months, as if 12 mos. were always the ideal period.

Given that it's too inconvenient to average eps over multiple years, and then calculate a p/e, we're better off just looking at PSR and price/book, especially near the bottom of a cycle.
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