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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Dan Meleney who wrote (40064)	11/15/2010 4:21:23 PM
From: Grantcw	Read Replies (1) \| Respond to of 78748

Hello Dan, Good question. I don't always use it, but I think it's useful for these 3 companies that may have more dependable future growth rates than others. It's loosely based on the PEG ratio which is equal to price to earnings/annual eps growth. If that ratio is less than one, then in general, a stock might be perceived to be undervalued. If it's greater than 1, then perhaps overvalued. So a rough cut at valuation for me is to assume that a fair valuation for these 3 would be a PEG ratio of 1. Therefore, I take eps and multiply it by the projected future growth rate to get a fair value rough cut. A good question for the group is whether others use this or not? I use this more for growth at a reasonable price plays. Thanks, cwillyg