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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Skeeter Bug who wrote (102295)	4/13/2000 2:37:00 PM
From: GVTucker	Read Replies (1) \| Respond to of 186894

Skeeter Bug, RE: , the only word describing a 45 pe for a 15% eps growth stock is "anomoly." making one's investment decision based on outliers is unwise, imho. First of all, remember that I was painting what is a highly optimistic scenario. I wanted to apply an optimistic PEG. I was not making a comment on the wisdom of expecting such a scenario. I'm sorry if I gave that impression. Secondly, a PEG of 3x can be justified easily, if you assume that the expected rate of return on the stock is less than the growth rate in earnings. In this case, the PE would contract over time as the earnings rose faster than the stock price. The key here is predictability in earnings. If earnings can be predictable (not Intel's history, but possibly Intel's future), then a 3x PEG is justified. This works not just in these 'absurd valuation' times but throughout market history. Again, this doesn't mean that I would buy INTC at a 45 PE in such a scenario, only that the market has shown that such a pricing is possible.