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Technology Stocks : Gateway (GTW) -- Ignore unavailable to you. Want to Upgrade?

To: debra vogt who wrote (5364)	2/12/1998 1:17:00 PM
From: Oeconomicus	Read Replies (1) \| Respond to of 8002

they might want to look at tech stocks whose growth was higher than their PE I am bullish on GTW too, but my point is that the whole idea of the PEG ratio was initially a means of comparing one stock to another, i.e. relative valuation. If GTW is trading at a trailing PE of 20 and long-term growth is projected at, say, 25% then the PEG ratio is .8. If a competitor, let's say DELL, is at a 50 PE with EPS growth projected at, say 50% then its PEG ratio is 1.0. The theory is that, all else equal, GTW is the better value. The concept has been perverted in recent years. It is now used by many to argue that a PEG ratio of 1.0 is justifiable on its own, i.e. the growth rate justifies a PE to match, rather than to argue relative value. Your description of the comments made implies that someone is now trying to justify PEs based on short-term growth rates, which would represent a further perversion of the PEG concept. BWDIK? After all, Cramer is a god. If he says GTW is worth a 52 PE, I'll happily sell my shares to him when it gets there. Hell, I'll sell to him half way there, say a 36 PE. Perhaps someone should point out to Cramer that the S&P 500 is at a 25 PE with earnings growth of only 6-9% expected this year. Regards, Bob