Forgot to add, some stocks now have very heavy CASH positions, so that makes the P/E and PEG calculation even more unreliable - you have to take out the CASH portion if it is a sizable portion.
Take CSCO, the price at 15 has 5 cash in it. So, do you use 10 to calculate the P/E or use 15?
INTC has 2 bucks cash per share, it also has a 4.5% yield at 12xx - the dividend should be safe, unlike those from banks, industrials, and even drugs. Hence despite the seemingly aweful PEG, the stock has strong support at 12, so far.
Both ALTR & BRCM has almost 4 cash per share, so how do you valuate it when stock trades between 16 and 18?
NVDA & MRVL, both 8 buck stock, both have 2 buck cash...
The list of tech stocks have 25 to 35% cash in share prices is going on and on...
How do a P/E based on stock price can accurately reflect such scenario?
Further more, the growth we see in the past, will not be repeated in foreseeable future - the productivity can only be improved so much... to a point, any further improvement is just something nice to have, but not a necessity.
It will be a long time before we would see the return of "paying for the growth" approach. |
