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tdh474 (36.13)

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February 16, 2007 – Comments (2)

I have never really understood how all the P/B and P/E works, but I must be doing something right by just going with a gut feeling on all of the stocks that I own and have picked on CAPS. Makes me feel good to know that even a beginner like me can go from a -20 stat to where I am today!!! I still feel that the market is still just an one person sport, one against all the rest. Seeing Revenues double, but the stock still goes down for the count??? Well, I guess I will never understand it.....

2 Comments – Post Your Own

#1) On February 17, 2007 at 6:04 PM, dwot (29.45) wrote:

Well, your approach is different than mine.

I see a lot of people accepting what I think of as bubble P/Es with little hope of the business ever growing to meet the valuation expectation.

In general, I look for low P/Es and reject companies with high P/Es. If I'm buying the stock I look far beyond that.

I loaded up on two Canadian stocks this week and one has no earnings what-so-ever, but, their earning potential for this year is through the roof, imho. They will potentially make half of their market cap. It is so unreal, I think it actually scaring investors away.

And the other on the surface has had back to back zero earnings, but they've had tax write-offs and the tax write-offs have been dramatically declining, so the earning growth has been hidden in that. And it is a newer company that is just on it's first year that it will be cash positive.

I never looked at the book value of either, but I suspect both are low. Usually book value is also something that is fairly important to me, but in these cases, the one company simply got a sweetheart deal and book value is what you paid, not what it is really worth.

The other is mostly intellectual property and that never has a book value.

I'd love to look at the stock that revenues doubled and it went down.

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#2) On February 18, 2007 at 1:53 PM, tdh474 (36.13) wrote:

Well the stock profit that doubled was MCD or better known to kids under 12 as Donalds. The Revenues were up 11%, they met wall street earnings estimate but that is all they did. Just like they did for most of the fiscal year.

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