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To: Pruguy who wrote (4494)	2/6/1999 9:09:00 PM
From: Chuzzlewit	Read Replies (2) \| Respond to of 41369

Pruguy, actually, some of us practitioners have a different approach. First, we try to understand the dynamics of the business. For example, how rapidly can the business grow without requiring external capitalization. Dell, for example, has virtually no growth constraints because of the efficiency of its business model. Intel, however is much more constrained because of the capital requirements of new fabs. We look to see if the business is seasonal. We try to see if there is a downturn coming, either through excess capacity or competitive factors. Then we also look at the basics of the business. Issues such as debt coverage and liquidity are important. We tend to spend a great deal of time on analysis of free cash flow (that's why I've been warning people against AMZN), or whether the company might be stuffing its channels (as CPQ was, which became obvious in studying its financial statements). And we look at the macro picture. How is the market segment as a whole expected to grow over the near-term and long term. Some of us use this information to generate price targets, but I don't, because I believe that the difficulty in so doing makes the data virtually meaningless. That's why I devised the CNPEG as a metric. When used in conjunction with finding rapidly growing companies in rapidly growing industries it provides very good practical results. TTFN, CTC