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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Bruce Brown who wrote (23577)	4/26/2000 7:52:00 AM
From: Mike Buckley	Read Replies (1) \| Respond to of 54805

Bruce, Keep in mind that the particular PEG (Fool Ratio) works best with a company that has a market cap valuation of less than $1B. Anything over that should really be calculated with the YPEG formula. I don't want to get into a debate about this, but I don't believe that. Your comments are certainly appropriate because that was the original intent of the Motley Fool. However, I believe the YPEG is seriously flawed because it is so inexacting due to the use of 5-year estimates as the growth component. Also, given the inflation that has taken place in the market over the years I think there are many companies with market caps of $5 - $10 billion that even the Fool would recognize can be appropriately measured using the PEG ratio. When it comes to earnings-based valuation tools, I use the PEG ratio exclusively. To account for the different companies being measured, I make mental adjustments to my interpretation of the results based on percieved risk. I find that far more useful than switching to the YPEG for the companies that are percieved to have less risk. --Mike Buckley