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Pastimes : Georgia Bard's Corner

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To: Rob D. who wrote (1026)4/30/1998 10:58:00 PM
From: TraderGreg  Read Replies (4) of 9440
 
Not to confuse you, but I'd like to add one that I use:

PEG which is the P/E ratio divided by the Growth rate in Earnings.

What I like about the PEG is it helps explain why some types of stock sectors are afforded higher growth rates than other sectors.

PEGs less than one are usually great buys. A PEG of 1 means the stock's P/E is the same as its growth rate, kind of neutral. But a stock with a P/E of 10 but a growth rate of 30% a year is considered undervalued because earnings are growing much faster than the P/E would indicate. It's PEG is 1/3 , which is usually a screaming buy.

TG
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