Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Nya_Quy who wrote (62843)	11/12/2019 4:05:55 PM
From: E_K_S	Respond to of 78652

Notice how the second table have much higher PE's. A higher PE implies higher growth. You can also use the PEG ratio. Many investors us a PEG ratio which incorporates a stock’s growth rate into the price to earnings ratio. When you calculate a company’s PEG ratio, you take the PE ratio and divide that number by the company’s current earnings growth rate. So, for example, if a company has a PE ratio of 15 and its earnings are growing at a 10% rate year over year, then that company’s PEG ratio would be 1.5 (15/10=1.5 PEG). Dr. Pepper Snapple Group’s earnings grew from $2.17 per share in 2009 to $2.44 per share in 2010. So, they had an earnings growth rate of 12.4%, and their PEG ratio is 1.2 (15/12.4=1.2). I do not really use the PEG ratio but it may help normalize the growth rate. EKS

To: Nya_Quy who wrote (62843)	11/12/2019 6:47:31 PM
From: OldAIMGuy	Respond to of 78652

Hi N, Re: Value Line "Appreciation Potential"...................... I translate it to "best guess" but I'm sure there's a method as they've used the same 3-5 year brackets forever. I'll check their web site and see if there's an explanation. All stocks that are part of VL's 1700 stock universe have the same brackets. In some cases they'll show negative values for the future if they feel the price/share is already well into the projected 3-5 year calculation. Best regards, Tom

To: Nya_Quy who wrote (62843)	11/13/2019 10:14:36 AM
From: OldAIMGuy	1 Recommendation Recommended By Nya_Quy Read Replies (3) \| Respond to of 78652

Hi N, Re: Value Line "Appreciation Potential"................................. This is what I found at their site: Appreciation Potential The percentage difference between the recent stock price and the mid point of the 3- 5-year Target Price Range. Target Price Range The projected average annual price range three to five years hence, based on Value Line earnings and P/E Ratio forecasts. The midpoint of the range is our estimate of the average annual price three to five years from now. The percentage appreciation potential and the estimated annual total return are computed from the projected low and high prices three to five years hence. Value Line also does a summary of all stocks' potential on the lead page of their "Summary and Index" section weekly. I've used this data over the years to gauge general market risk as a barometer. In my case, high potential equates to low risk. Here's what Value Line's current page looks like: Note the current median price appreciation potential is 45%. Then note in that same box the level it was at previous market lows and highs as well as a half year ago. I find this median value to be a way of judging what individual stocks potential means. A stock that has a much higher current potential than the median should have something compelling in its story to account for the differential. Right now VL's not too optimistic about the future. "Appreciation Potential" for the next 3-5 years is less than half of what it was at the 2009 low point. It's currently lower than 26 weeks ago and the July recent market high point. I have this data from 1982 to the present. Here's a recent histogram of markets vs Value Line's AP data: For this graphic I use the inverse of Appreciation Potential to get a feel for things. (1/AP) The higher the appreciation potential, the lower the market risk. Right now you'll see that risk is just about average since 1982. That takes some of the sting and worry out of their current readings. If you look back to the end of 2018 and early in 2019 risk was measurably lower but not crazy bullish like 2009. Here's a view of that time period: It's clear that the late 2008 - early 2009 period was a tremendously bullish time to put new money into the markets. Without looking I think risk had peaked in 2007 along with the general markets' hitting new highs at that time. This seemed to anticipate of the terrible sell-off in late 2008. I hope this helps you get a feel for Value Line's Appreciation Potential info on a macro basis for their universe of stocks. Individual stock AP is far more subjective but at least can be compared to the median value for all 1700 stocks. Best regards, Tom