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

To: GVTucker who wrote (102301)	4/14/2000 12:33:00 PM
From: Harry Landsiedel	Read Replies (1) \| Respond to of 186894

GV Tucker. Re: "The reason for the benchmark of PE=growth rate is that high rates of earnings growth rarely last in the long term." I thought it was based on the fact that the value of a business is the cash inflows and outflows discounted at an appropriate interest rate. In that case while the PE (and the PEG) may move up and down over time (the "voting" effect), the average PE/PEG will eventually reflect the underlying growth in cash inflows less cash outflows (the "weighing" effect.) The best businesses to own then are those where the business value and the market value grow at the same rate, and the best businesses to buy are those where the market value is significantly below the business value (the margin of safety). If these assertions are true, assigning a PEG higher than 1x is "assuming" that the market will misprice a business or that the company will suddenly start growing a lot faster. While this is worth hoping for, when it is planned for it can become speculation, not investing IMHO. The purpose of my earlier post was to alert the thread to a discrepancy between the analysts growth rates and target prices. Cranking in a higher PEG when, for the past 10 years, Intel's PEG has been significantly below 1X would merely posit a dubious rationale IMHO. Hopefully the analysts' growth estimates are too low and Intel will continue to grow at 30%+ for the next ten years.:) HL