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Strategies & Market Trends : A.I.M Users Group Bulletin Board -- Ignore unavailable to you. Want to Upgrade?

To: JZGalt who wrote (8239)	8/17/1999 3:32:00 PM
From: JZGalt	Read Replies (2) \| Respond to of 18928

Tom, I've been playing with that Microsoft Investor Portfolio tool and found a neat feature. If you put in your trades it calculates an annualized return on investment. Top 2/3rds of my portfolio. C = 24.8% - since 1987 GALT = 285% since May 1998 PMCS = 208% since mid-1997 ELN = 30% since 1995 MRK = 28.5% since 1994 ASYT = 26.8% since Oct 1997 LU = 63.9% since June 1997 CMB = 27.5% since 1997 MO = 9.7% since 1990 + 4% dividend CTXS = 278% since April 1999 AMKR = 237% since November 1998 LUV = 41.2% since 1997 I wonder what the returns would have been if I'd have AIM'd these? ---- Dave

To: JZGalt who wrote (8239)	8/17/1999 5:11:00 PM
From: JZGalt	Respond to of 18928

OT - For those of you who are interested this is very close to the way we look at Quadrant II investing. confirmatoryanalysis.com The Spear Report $297 per year 1-800-491-7119 August 16, 1999 Page 2 PEG Ratio Added to Fundamental Tables Starting with this issue, we will be covering the PEG (P/E Growth) ratio in the Fundamentals table. To make room for the PEG ratio, the Current ratio will be removed since it is very similar to the Quick Ratio and the Quick ratio gives a better picture of a company?s ability to cover its current liabilities by not including inventory in current assets. P/E is, of course, current price divided by earnings per share. (Our P/E uses the earnings estimate for the current year. Some publications use earnings for the trailing four quarters.) P/E is often used to gauge a stock?s true value, with P/E?s over 25 or so considered ?too expensive?. A P/E ratio by itself, however, can be deceiving. The PEG ratio is used to adjust P/E for growth rates, so there is a better picture of the company. For example, consider two companies in the same industry, both with earnings per share of $0.50, while one has a stock price of $60 and the other of $20. On a strict P/E ratio basis, most investors would go for the $20 dollar stock since it has the lower P/E. The picture changes, however, if you bring growth rate into it. If the one with the higher P/E ratio is much better positioned for future growth, and the company with the lower P/E ratio is struggling and its growth prospects are very dim, then suddenly the stock with the higher P/E ratio looks better despite the higher P/E. By looking at the PEG ratio, a growth company may not look as overvalued as it does when just the P/E ratio is taken into consideration. In our Fundamentals table, PEG is calculated by taking the P/E ratio column and dividing it by the ?Next 5 Yrs Est. % Growth/Year? column. The latter number is the average percentage growth per year expected by analysts for this company over the next five years. To make sense out of this ratio, let?s look at an example. A PEG ratio of .50 means that the stock?s P/E is half its growth rate, so it is at 50% of its full, fair value by traditional standards. This implies that a stock with a PEG ratio of 1.0 is fully valued, but in practice, the market tolerates much higher PEG ratios for the strongest growth companies, so the number is better used to compare high growth companies against each other than to compare one stock to any absolute ?good? value. Keep in mind that 5 year earnings estimates for growth companies are notoriously bad, and usually underestimated for the best companies. PEG ratio is therefore only one of many tools to be used in stock selection and should not be relied on heavily. This ratio does have other limitations, such as when it is used to value many of the cyclical stocks, since these stock are valued more by assets than operating income. The Motley Fool uses a similar ratio called the Fool Ratio, based on 2-year earnings estimates, but cautions that the ratio tells you nothing in at least the following industries: airlines, several types of finance companies, oil drillers, and real estate.