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

To: Uncle Frank who wrote (40177)3/10/2001 3:14:06 AM
From: Jacob Snyder  Read Replies (1) | Respond to of 54805
 
re: define "reasonable" valuation:

The general formula I use, (which I've used repeatedly on this and many other threads), is:

Fair Value = a stock price at a PEG of 1 = (forward 12M EPS) X (expected LT EPS growth rate).

The main problem with this method is, although I only have to plug in 2 variables, both of them are guesses.

I also like a stock to be at about the valuation (using PE, P/S, P/CF) it reached, at other times when it was out of favor.

So, for instance:

NTAP: 0.40 X 50 = 20
EMC: 1.00 X 35 = 35
CSCO: (in doubt) X (in doubt) = I'm waiting till the smoke clears on this one.



To: Uncle Frank who wrote (40177)3/10/2001 7:29:28 PM
From: Shane M  Respond to of 54805
 
If I were to offer a guess, I'd venture that, as a result of a massive sector rotation, tech is currently very undervalued, and the bubble is in the "defensive" stocks.

UF, I agree. On net, I doubt that money is leaving the market on a large scale or on any sustained basis. To me that certainly would explain the low or no growth dow stocks holding up well during the tech wreck.

Shane


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