Key Points
The problem with PE ratio is that it not only creates a mirage in terms of buying of a stock..
But even selling stocks just because P/E is high is also something which leads to selling wealth creators early and then regretting or buying them at a point when they are expensive in real terms..
So it is better to use peg ratio, which comes with its own challenges, which are still worth taking...
If it is midcap stocks then it deserves to be paid more..
Now, how much more should be paid would be determined by dividing a companys PE multiple with its growth ratio..
You might be interested in
Risks taker and wealth creation; 5 mid cap stocks with high ROE &ROCE
02, Jul, 23When the nifty is forming a new high everyday, risks are increasing on the street. In such times, it would be better that while looking at growth stocks one also focuses on reducing the risk by taking a hard look at some numbers which are critical indicators. Refinitiv’s Stock Report Plus which lists stocks with high upside potential over the next 12 months, having an average recommendation rating of “buy” or strong Buy
Long-term wealth creation: 6 stocks with the right PEG ratio
30, Jul, 23One of the reasons why looking only at Price earning (PE) ratio leads to wrong decisions is that by the time PE gets adjusted to newly announced earnings per share (EPS), it is too late. Especially in the case of commodity stocks, PE ratio is probably the last thing to look at as it creates a mirage of value. Coming on the list is an Adani group company, which even skeptics say is probably best placed in its sector.
Will PLI and China+1 help in weaving profitability? 4 stocks from textile sector with upside scope of up t
23, Jul, 23Textile is one of the oldest industrial sectors in India. However, right from labour issues to smaller Asian countries becoming more competitive in terms of cost of production, different segments of the textile industry have faced more headwinds than tailwinds in their history of existence. This list is drawn from Stock Reports Plus, powered by Refinitiv, with over 4,000 listed stocks along with detailed company analysis focusing on five key components - earnings, fundamentals, relative valuation, risk and price momentum.
Safety with reasonable growth premium? 4 largecap and 1 midcap stocks with right PEG ratios
04, Feb, 24It makes sense to pay more for a stock whose earnings grow at a faster rate. That is the reason why when a sector gets discovered first as a fast growing sector we see a sudden rush of money in that sector. If it is midcap stocks then it deserves to be paid more. Now, how much more should be paid is the question. One of the ways is to determine by dividing a company’s PE multiple with its growth ratio.
Difficult ratio to find, even more to understand; but worth the effort when looking at long-term investing
30, Apr, 23In simple terms it makes sense to pay more for a stock whose earnings grow at a faster rate. Now, how much more should be paid would be determined by dividing a company’s PE multiple with its growth ratio. So, Forward PE multiple is divided by the 5-year forecasted growth rate to arrive at the PEG ratio.