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Microcap & Penny Stocks : GLOW - Global Games, Inc. - Great Profit Potential !

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To: bodie who wrote (3017)6/14/1998 12:55:00 AM
From: Thomas George Warner  Read Replies (1) of 8879
 
Bodie it would not be correct to analyze any stock using the method you outlined. There are three generally accepted PE's for any stock , price/current earnings, price/trailing earnings, and price/future earnings.

In order to properly evaluate a stocks PE one has to know the growth rate of either earnings or sales and extrapolate into the future with some certainty of being correct. A rule of thumb for value investors is that the PE should always be less numerically than the growth rate, ie; 30% earnings growth PE=30 or less. Since GLOw is a speculative stock at this point the PE is not relevant. Hope this helps you.
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