11 October 2005

Finding Value in Markets...

I was doing some searching on CNN Money, and came across this link, which gives some good indications of the value of a stock. One of the best comparators to the value of the stock, is to the S&P 500 P/E ratio. Now, there are other considerations to determine whether its a great value, but 2 benchmarks are that the S&P 500 have returned about 12%/year, with an average P/E of approx. 16.5...anything lower, with the potential to garner growth greater than the P/E (that is, growth%/PE ratio >1), then look for it to perform better than the index.
Keep in mind, you still need to look at the company in more detail, but the above should weed out a few stocks you may be interested in.
I am looking at a few stocks now, and will blog about them later in the week when I do a little more digging.

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