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when looking at stocks to buy (small scale investing at this time) I would like to know what a good target P/E ratio should be. Two stocks im looking at are currently P/E'ing at 9.80. I believe this is serviceable but i want to see if i can boost my opportunities. should i look for ratios lower than 9.80 or higher? stioll getting a handle on the P/E ratio factor. Thanks in advance.

2007-01-18 19:26:56 · 4 answers · asked by JBC 3 in Business & Finance Investing

4 answers

The "price to earnings ratio" (for pedro's sake) is a decent measure, and everyone seems to be using it.

Quality of earnings is another issue. Always take a look at the statement of cash flows (the "cash from operating activities" section, especially) and make sure that they're actually making cash money.

Enron booked miractulous earnings for 11 years and it was all fake. The only place you would have noticed would have been on the statement of cash flows.

(The statement also shows you exactly where they're spending their earnings.)

2007-01-18 19:49:11 · answer #1 · answered by Anonymous · 0 0

P/E is something I never look at.... My investing consists of companies that interest me, and those around me. I then do a little research about them, make sure they are at a record low and then buy.

I only hope you can do as well as I am doing from home with stocks. Its amazing how I seem to be able to pick the good ones and make a haul.

Happy Friday !!

: )

2007-01-19 01:56:29 · answer #2 · answered by Kitty 6 · 0 0

PE not a primary factor in investing. Different for each industry as well. Autos, Banks, Airlines have low PEs. Techs generally higher. Without more info that 9.8 is meaningless. Can contact me through answers/e-mail with more info if want.

2007-01-19 03:00:14 · answer #3 · answered by vegas_iwish 5 · 0 0

If I know what P/E means then the lower the better.

2007-01-18 19:33:54 · answer #4 · answered by Anonymous · 0 0

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