Ufinance.net

What you pay for growth in stocks does matter; valuation still remains important. During the late 1990s investors chased high flying tech stocks right off the P/E charts abandoning more reasonably valued stocks in other sectors.You must judge the likely sustainability of earnings and revenue acceleration, potential price appreciation is greatest when a company’s stock price does not fully reflect its future earnings power. Therefore, it is best to search for reasonably valued stocks with improving fundamentals.

When you see extremely high P/E ratios it is considered a growth company. You must examine the company closely before investing in P/Es that are out of whack with the overall market.

This entry was posted on Friday, July 28th, 2006 at 8:19 am and is filed under Investing, Stocks. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.