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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Gottfried who wrote (9288)	4/4/2003 9:38:22 PM
From: Gottfried	Respond to of 95625

P-E the best valuation method - from BW... Return of the P-E During the boom years, when price-to-earnings ratios zoomed off the charts, Wall Street analysts told us p-e's didn't matter. Look to other ratios, like price-to-sales, price-to-cash flow, or even price-to-mouse-clicks as the way to value a company's stock, they argued. Well, it turns out, the humble p-e ratio does the best job, according to a recent Merrill Lynch study. An investor who consistently bought the 50 stocks in the Standard & Poor's 500-stock index with the lowest trailing 12-month p-e's produced better returns from 1986 through 2002 than an investor using the 50-cheapest-stock strategies for eight other valuation ratios. The p-e strategy delivered a 17.2% annualized return. By comparison, price-to-cash flow returned only 13.1%, price-to-sales, 11.9%, and price-to-book value, 12.4%. Even more curious, buying stocks with the lowest forecast p-e's delivered only 15.4% annualized returns. That's surprising, because pundits have always advised investors to buy stocks on future profit expectations, not past results. By Lewis Braham