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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Dave Shares who wrote (12569)	3/18/2000 10:56:00 PM
From: E_K_S	Respond to of 15132

I agree Dave. What's your opinion on the PEG ratio? (Anybody else listen to Bob's discussion on the PEG ratio...jump right in) I believe Bob B. mentioned a few weeks back that based on his discussion with analysts that a stock with a PEG of greater than 1.5 would be "expensive" compared to other broad based indexes. I guess he was talking about the Wilshire 5000 as his benchmark measure. I assume then, BOB B. would not buy Technology stocks (or find them as a "buying opportunities") that have a PEG greater than 1.5. I am starting to see PEG's greater than 2 and reaching 3 based on next year's earnings! Sounds expensive to me too. =========================================================== I am finding that my small Cap and even Micro-Cap stocks continuing to do well. These equities are affected by company specific events rather than by "Mr. Market". Also, when a micro-cap graduates to the Mid-Cap category, larger mutual funds begin to accumulate shares, making the overall market cap. move higher. The PEG ratio for these size companies (where both revenue growth and earnings growth are very high) is a much better indicator than using PE. I also look at EBITD (Earnings Before Taxes & Depreciation) as a measure of Free Flow Cash Flow (the life blood of the company). EBITD must be trending towards positive (or be positive) for the company to kick into high gear. This will occur before any relevant PE is noticed. Both of these financial indicators have worked quite well for me in the past. EKS P.S. My standard benchmark is to find a company with a PEG = 1. Also, if the (trailing) PE is less than 10 it's a winner. This combination is rare or reflects a company that just hit a land mine (or cooked their books).