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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 74.59

+0.3%

Jan 23 9:30 AM EST

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To: JakeStraw who wrote (53074)	5/17/2001 9:38:08 PM
From: Jacob Snyder	Read Replies (1) of 77400

re: "First Union believes that an appropriate price-to-earnings multiple for a stock with a 20% growth rate is between 20 and 30 times the forward-year earnings" Before the bubble, they used to use trailing earnings. Before the bubble, they said the appropriate PE was equal to (not up to 50% higher) than the growth rate. Maybe a PE 50% higher than the growth rate is justified, if the forward earnings are near-100% certain to happen, recession-proof, in a non-cyclical industry. Like maybe a drug company with a 10% growth rate deserves a PE of 15. We've had recent evidence that Cisco doesn't fit this catagory. Statements like that make me believe we are still in a market bubble.

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