{"id":903,"date":"2008-09-18T01:30:04","date_gmt":"2008-09-18T05:30:04","guid":{"rendered":"http:\/\/www.thedisciplinedinvestor.com\/blog\/?p=903"},"modified":"2016-09-20T03:40:36","modified_gmt":"2016-09-20T07:40:36","slug":"screen-5-peg-ratio-play-stocks-for-2008","status":"publish","type":"post","link":"https:\/\/thedisciplinedinvestor.com\/blog\/2008\/09\/18\/screen-5-peg-ratio-play-stocks-for-2008\/","title":{"rendered":"Screen: 5 “PEG-Ratio Play” Stocks for 2008"},"content":{"rendered":"

Last year, 5 positions were recommended from a screen we created to provide a simple way to seek out stocks that may be considered value investments but have superior earnings growth characteristics. \u00a0 The results\/performance of the 5 positions with the highest EPS Growth estimated for next year.<\/p>\n

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In my book, “The Disciplined Investor<\/a>,” I discussed PEG ratio as a useful tool to be put in your investment toolkit. And these days, we can all use all of the tools available.<\/p>\n

Excerpt from “The Disciplined Investor”:<\/strong><\/p>\n

More than likely, a result that is less than one tells us that we may have a good investment that is undervalued for the time being. On the other hand, a result of more than one is usually a sign that the position is valued higher than it should be. Originally, the PEG Ratio was developed to look at stock statistics in more than one dimension. By adding expected growth to the P\/E ratio, it will effectively provide a comparison tool to level the paying field when valuing stocks.<\/p>\n

Originally, the PEG Ratio was developed to look at stock statistics in more than one dimension. By adding expected growth to the P\/E ratio, it will effectively provide a comparison tool to level the paying field when valuing stocks. Small to Mid-Cap stocks are well suited to utilize the PEG Ratio as the initial screening tool since they usually pay little or no dividends. In effect, is a good tool for some stocks that are usually more difficult to value using traditional methods.<\/p><\/blockquote>\n

Just as it is true that the ratio is beneficial for smaller stocks, larger stocks should have an additional requirement to help create a more usable and more appropriate valuation tool. By simply adding an overlay of dividend yield along with the earnings, a much better outcome can be crafted for large-cap stocks.<\/p><\/blockquote>\n

Here is a quick guide to using the PEG ratio as a part of your investing; lower numbers are better:<\/p>\n

PEG ratio guide<\/strong><\/p>\n