**more PEG**
>>My advice would be to not be mislead by PEG ratios. As you said, it'll have you passing up the MSFT's, CSCO's, and TLAB's of the world.<<
Basically, PEG just says when the PE is significantly lower than the stock's growth rate it's a good buy *provided* it meets a host of other criteria, the PEG being the final criteria in the process. One criteria is that the stock you are evaluating has a market cap under $500 million. The Fools specifically point out that the PEG is rather meaningless for the MSFT's, CSCO's, and TLAB's of the world. It's a *small cap* tool.
Personally, I don't care much for the PEG, it's too easy to use as a magic bullet; just look at that one ratio and you'll know if it's a buy or sell - doesn't really work that way, does it? And even the supporters of the PEG would say you are way out-of-bounds trying to use that ratio to value TLAB. However, Fool School Steps 1-9 are pretty good; they pretty much fall under the categories of "put your house in order first" and then invest through "due diligence".
-pgi |
