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

To: Pirah Naman who wrote (23625)	4/26/2000 6:01:00 PM
From: Eric L	Read Replies (2) \| Respond to of 54805

Pirah << who really is a valuation nut >> As a "valuation nut" I am wondering if you have had a chance to read Jim Jubak's recent article called "DON'T EVEN THINK ABOUT SWITCHING SECTORS" moneycentral.msn.com Excerpts: Not all blue chips are cheap and not all technology is expensive. Try picking stocks instead of trying to guess the identity of the next hot sector. <snip> But real technology companies like PMC-Sierra (PMCS) or Network Appliance (NTAP) I don't think they were overvalued before, and I certainly don't think they're overvalued now, especially in relationship to the blue-chip growth stocks. And I think I can prove it. <snip> It's tough to compare the valuation of stocks with very different growth rates and future prospects, but the good old reliable PEG ratio is a solid place to start. (To build a PEG ratio, you divide a stock's price-to-earnings (P/E) ratio by its growth rate. I like to use the forward P/E ratio -- that is, the current price per share divided by the projected annual earnings per share -- and a projected future growth rate. I think that gives me a better picture when I'm comparing two growth stocks.) Comparing Coca-Cola and PMC-Sierra Let's go through this process for Coca-Cola (KO, news, msgs), a blue-chip growth star from years past that reported better-than-expected earnings this week. (Wall Street had expected 21 cents a share; Coca-Cola reported 32 cents.) etc. Comments on the article appreciated by those more facile with numbers than I. Worst case, it is an interesting read, as was his recent article comparing JDSU & Ford. - Eric -