share market question?

Question

Please could you provide me answers to the following questions :

1. Is the stock considered good if it has a higher P/E or a lower P/E

2. In yahoo finance they do not provide the expected growth rate or PEG so in this case, how am I suppose to find the PEG value.

3. What other factors (part from P/E, peg and dividend) should I consider before buying a share.

4. As Microsoft is a huge company it can pay regular dividends as such is it worth buying the shares of Microsoft

Thanks for your help

Answer 1

1. In general stocks with lower pe's outperform stocks with higher pe's.

2. If they do not show the peg it is because no analysts are projecting growth rates for the company. The peg is somewhat a shot in the dark anyway since it is based on analysts projections.

3. Size of the company. larger companies are more stable than smaller companies. Competition. Is China a threat? Or is the company in an intrenched position. Debt. Is the company burdened by high debt load.

4. Maybe and maybe not. They seem to have lost their way.

Answer 2

1) There is no clear answer as P/E alone is insufficent to decide. When all other things are equal like good growth prospects, management etc. then low P/E stock gives higher percentage return because the market has not rerated it. High P/E stocks have already been discovered by the market and so offer lesser head room for price increase.

2) In yahoo please click on the link on left side which says "Key Statistics". You will get earnings growth and PEG ratio in that link.

3) Factors to consider before buying a stock: (a) Future growth should be reasonably visible. (b) Growth should be sustainable (c) Management should be good (d) Multiple product lines and multiple markets are better than single product or single market. (e) New products should be in the pipeline. (f) Debt/equity ratio (g) Regular Dividends paid (h) Volume of shares traded should be high (i) State of the economy in general. (j) Fed interest rates direction and much more.

4) Microsoft may be bought on declines.

Answer 3

There is no need to know the PEG or other guesswork.
The Div Yld and P/E tell you everything. The latter shows the consensus opinion of the market.

A low P/E shows that the market has high expectations from that company. But you are paying a high price for it and if it disappoints, the price drop will be big. The op posit applies to low P/E. Go for something in between.

Do not be put off by bores who tell you you need to study the market 24/7. All you need is common sense.
Mutual funds are good but expensive, except for the trackers.
Over the long term, the average company in the US has beaten every other form of investment including property.
Go fore it

Answer 4

Keep in mind a really good company can have a really high PE. This usually means there are tons of people wanting to buy it. It just means there's a good chance it is overpriced if the PE is too high.

Find a different website that does list the peg.

There are lots of different factors to consider.
If you need more help than was answered by these answers, here's a book on trading for beginners:
http://www.best-stock-trading-systems.com/trading_for_beginners_review.html
It will teach you all of the factors you need to know to invest.

Don't buy companies that pay dividends. You want small cap stocks that are using their profits to raise the stock price, not pay out profits to shareholders.

Answer 5

Really need to stick to mutual funds & or etfs if asking these questions. Don't buy individual stocks without deep knowledge & bankroll & answers to these qs won't help.