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To: OLDTRADER who wrote (144312)	10/11/1999 1:22:00 AM
From: stockman_scott	Respond to of 176387

Here is a VERY interesting article on 'high P/E stocks'...FYI... <<Front page of Monday's IBD: INVESTOR'S CORNER High P/E Ratios Often Deliver Best Value By David Saito-Chung Investor's Business Daily 10/11/99 In the world of pro baseball, you need to pay higher salaries to get the players who produce outstanding numbers on the mound or at the plate. The stock market is no different. A stock's price-to-earnings ratio, or current share price divided by total earnings per share over the past four quarters, is one way to measure how much you're paying for a stock. If you bought a stock with a P/E of 20, it means you're forking over $20 a share for a dollar's worth of earnings. Does that sound pricey? Some say yes. More investors would agree and avoid buying a stock if its P/E was, say, 30. So where do you draw the line? Don't. Limiting your buys to low P/E stocks may prevent you from owning the very best goods on the market. That's because high-growth stocks have historically shown higher P/Es than the rest of the market before they made their huge price moves. Truth is, you usually have to pay a premium for the best winners during a bull market. ... A high P/E on a stock that is just breaking out may end up looking minuscule several months later. Take 4Kids Entertainment, which licenses the marketing and merchandising rights of the red-hot Pokemon characters. When the stock cleared a 16-week consolidation on July 7, it sported a P/E of 33. Ten weeks later, its P/E was around, 86 as the stock jumped 280%. ...The P/E ratio can be used to roughly gauge how much a winning growth stock could theoretically rise in the future. Just multiply the stock's average P/E over the past quarter by its earnings-per-share estimate for the next 12 months. Say a great stock trading near 60 has a stable P/E of 40. The company is forecast to post earnings of $3 a share in 2000. The stock could hit 120 within 15 months, assuming the earnings materialize and the market maintains its current multiple. This gives you a sense of how far the stock could run. And letting your winners run is the path to big profits....>> Wiliam: I'm sure you and Kemble are BIG proponents of the last statement <VBG>. Best Regards, Scott ------------------------------------------------------------------------------------------------------ BTW: I watched the U of M game with some friends....close first half...the Wolverine defense let up in the 3rd quarter and this was costly...they made a good attempt at a comeback.....I was pleased with the way Brady and Terrell were playing. It is amazing how one crucial turnover can decide a game -- but often it does....Oh well, you can't win them all....more good games on the horizon.