Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] market direction
Date: Sun, 13 Jan 2002 12:08:33 -0600
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This is a multi-part message in MIME format. - ------=_NextPart_000_00EC_01C19C2B.05C04CE0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable One of the things that the CANSLIM method looks for is an = "overextension" of the PE from the time of breakout to a "possible" top. = The rule of thumb is to take the trailing PE at the time of breakout and = add 121%. Then, using estimated EPS, calculate a target price based on = this target PE. (important point to remember is that the target PE is = based on *forward* growth/EPS estimates and is therefore a forward PE) These numbers are from an IBD example: Example: Current trailing PE =3D 34. Forward EPS $1.10/share.=20 Target PE =3D 34 + (121% * 34) =3D 75.14 Target Price/$1.10 =3D 75.14 Target Price =3D $82.65 The interesting thing is that if the estimated earnings are raised, = the target forward PE would remain the same, but the target *price* = would move up. (or vice versa, of course) IBD numbers say that the = average PE of a growth stock at breakout is near 50. That means = "overextension" target PEs would be, on average, anything > 110.5. = (remember, not trailing PEs, forward PEs) One strategy would be to look for trailing PEs <=3D50ish and compare = to forward PEs to see if the growth stocks are in range. Katherine ----- Original Message -----=20 From: rolf hertenstein=20 To: canslim@lists.xmission.com=20 Sent: Sunday, January 13, 2002 12:14 PM Subject: Re: [CANSLIM] market direction Nothing to be sorry about! I'm here to learn from people's opinions. My take on 'value and/or growth' (from Ann's question). I always = thought of growth as growth in earnings, sales, etc. So the trick is to find = low P/E stocks with fast growth, which is the same as the low PEG ratio = someone else mentioned. WON worry about growth and not P/E - not sure I ever bought that concept completely, especially now. Rolf > > Sorry to be so opinionated. > > Andreas > > > > -----Ursprungliche Nachricht----- > > Von: rolf hertenstein [SMTP:rolfh@mindspring.com] > > Gesendet am: Sunday, January 13, 2002 5:54 PM > > An: canslim@lists.xmission.com > > Betreff: Re: [CANSLIM] market direction > > > > I'm still concerned about the overall market valuation, which = remains high. > > Yes, as earnings improve, market P/Es should lower, assuming = prices > > don't accelerate faster than earnings improve. > > > > Even though WON gives little credence to P/Es, I'm adding a P > > (CANSLIMP ?) for the time being. I think many investors will be = spooked > > by high P/Es (e.g., KKD) and tend towards solid companies with relatively > > low P/Es. Just one new investor's opinion. > > > > Rolf > > > > ----- Original Message ----- > > From: "Dan Forant" <dforant1@nycap.rr.com> > > To: <canslim@lists.xmission.com> > > Sent: Sunday, January 13, 2002 9:31 AM > > Subject: Re: [CANSLIM] market direction > > > > > > > I have been saying all along this is going to be a = sloooooooowwwww, > > > recovery. Well into the year. All we have to do is *read* the = news. I > > listen > > > to a local analyst here named Larry King, he's with Smith = Barney. A few > > > weeks ago he was calling for a quick market return. Just Friday = he changed > > > course and now calls for growth but very slow. Analysts jobs = from > > brokerage > > > houses are to soften the tone of bad news. They can even make it = sound > > good. > > > Sure there are stocks out there that the savvy trader may pick, = but on > > > average not. It takes months to years for rate and tax cuts to = filter into > > > the economy. > > > > > > DanF > > > > > > > > > ----- Original Message ----- > > > From: "Kent Norman" <kent_norman@yahoo.com> > > > To: "CANSLIM" <canslim@xmission.com> > > > Sent: Sunday, January 13, 2002 10:11 AM > > > Subject: [CANSLIM] market direction > > > > > > > > > > Many "experts" are expecting the market to follow > > > > tradition and rise in January and go flat to down for > > > > a few months. Do you think this weeks 5 down days are > > > > meaningful? > > > > > > > > I know WON says we don't need to be concerned with > > > > where the market is heading, just where it is. > > > > > > > > So where is it? Is the party over? Should we all get > > > > out of the pool? > > > > > > > > Kent Norman > > > > > > > > > > > > =3D=3D=3D=3D=3D > > > > Opportunities always look bigger going than coming. > > > > > > > > __________________________________________________ > > > > Do You Yahoo!? > > > > Send FREE video emails in Yahoo! Mail! > > > > http://promo.yahoo.com/videomail/ > > > > > > > > - > > > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > > > -In the email body, write "subscribe canslim" or > > > > -"unsubscribe canslim". Do not use quotes in your email. > > > > > > > > > > > > > - > > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > > -In the email body, write "subscribe canslim" or > > > -"unsubscribe canslim". Do not use quotes in your email. > > > > > > > > > - > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > -In the email body, write "subscribe canslim" or > > -"unsubscribe canslim". Do not use quotes in your email. > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. > - -To subscribe/unsubscribe, email "majordomo@xmission.com" -In the email body, write "subscribe canslim" or -"unsubscribe canslim". Do not use quotes in your email. - ------=_NextPart_000_00EC_01C19C2B.05C04CE0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable <!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML><HEAD> <META http-equiv=3DContent-Type content=3D"text/html; = charset=3Diso-8859-1"> <META content=3D"MSHTML 5.50.4611.1300" name=3DGENERATOR> <STYLE></STYLE> </HEAD> <BODY bgColor=3D#ffffff> <DIV> <DIV>One of the things that the CANSLIM method looks for is an = "overextension"=20 of the PE from the time of breakout to a "possible" top. The rule of = thumb is to=20 take the trailing PE at the time of breakout and add 121%. Then, using = estimated=20 EPS, calculate a target price based on this target PE. (important point = to=20 remember is that the target PE is based on *forward* growth/EPS = estimates and is=20 therefore a forward PE)</DIV> <DIV> </DIV> <DIV>These numbers are from an IBD example:</DIV> <BLOCKQUOTE dir=3Dltr=20 style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; = BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px"> <DIV>Example: Current trailing PE =3D 34. Forward EPS $1.10/share. = </DIV> <DIV>Target PE =3D 34 + (121% * 34) =3D 75.14</DIV> <DIV>Target Price/$1.10 =3D 75.14</DIV> <DIV>Target Price =3D $82.65</DIV> <DIV> </DIV> <DIV>The interesting thing is that if the estimated earnings are = raised, the=20 target forward PE would remain the same, but the target *price* = would=20 move up. (or vice versa, of course) IBD numbers say that the average = PE of a=20 growth stock at breakout is near 50. That means "overextension" target = PEs=20 would be, on average, anything > 110.5. (remember, not trailing = PEs,=20 forward PEs)</DIV> <DIV> </DIV> <DIV>One strategy would be to look for trailing PEs <=3D50ish and = compare to=20 forward PEs to see if the growth stocks are in range.</DIV> <DIV> </DIV> <DIV>Katherine</DIV> <DIV> </DIV> <DIV>----- Original Message ----- </DIV></BLOCKQUOTE></DIV> <BLOCKQUOTE=20 style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; = BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px"> <DIV=20 style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: = black"><B>From:</B>=20 <A title=3Drolfh@mindspring.com = href=3D"mailto:rolfh@mindspring.com">rolf=20 hertenstein</A> </DIV> <DIV style=3D"FONT: 10pt arial"><B>To:</B> <A = title=3Dcanslim@lists.xmission.com=20 = href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>= </DIV> <DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Sunday, January 13, 2002 = 12:14=20 PM</DIV> <DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] market=20 direction</DIV> <DIV><BR></DIV>Nothing to be sorry about! I'm here to learn from = people's opinions.<BR><BR>My take on 'value and/or growth' (from Ann's = question). I always thought<BR>of growth as growth in earnings, = sales,=20 etc. So the trick is to find low<BR>P/E<BR>stocks with fast = growth,=20 which is the same as the low PEG ratio someone<BR>else = mentioned. WON=20 worry about growth and not P/E - not sure I ever<BR>bought that = concept=20 completely, especially now.<BR><BR> Rolf<BR><BR>><BR>> = Sorry to be=20 so opinionated.<BR>><BR>> Andreas<BR>><BR>><BR>> >=20 -----Ursprungliche Nachricht-----<BR>> > Von: rolf hertenstein=20 [SMTP:rolfh@mindspring.com]<BR>> > Gesendet am: Sunday, January = 13, 2002=20 5:54 PM<BR>> > An: <A=20 = href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>= <BR>>=20 > Betreff: Re: [CANSLIM] market direction<BR>> ><BR>> > = I'm=20 still concerned about the overall market valuation, which=20 remains<BR>high.<BR>> > Yes, as earnings improve, market P/Es = should=20 lower, assuming prices<BR>> > don't accelerate faster than = earnings=20 improve.<BR>> ><BR>> > Even though WON gives little = credence to=20 P/Es, I'm adding a P<BR>> > (CANSLIMP ?) for the time = being. I=20 think many investors will be spooked<BR>> > by high P/Es (e.g., = KKD) and=20 tend towards solid companies with<BR>relatively<BR>> > low = P/Es. =20 Just one new investor's opinion.<BR>> ><BR>> > = Rolf<BR>>=20 ><BR>> > ----- Original Message -----<BR>> > From: "Dan = Forant"=20 <<A=20 = href=3D"mailto:dforant1@nycap.rr.com">dforant1@nycap.rr.com</A>><BR>&g= t; >=20 To: <<A=20 = href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>= ><BR>>=20 > Sent: Sunday, January 13, 2002 9:31 AM<BR>> > Subject: Re:=20 [CANSLIM] market direction<BR>> ><BR>> ><BR>> > > = I have=20 been saying all along this is going to be a sloooooooowwwww,<BR>> = > >=20 recovery. Well into the year. All we have to do is *read* the news. = I<BR>>=20 > listen<BR>> > > to a local analyst here named Larry = King, he's=20 with Smith Barney. A<BR>few<BR>> > > weeks ago he was calling = for a=20 quick market return. Just Friday he<BR>changed<BR>> > > = course and=20 now calls for growth but very slow. Analysts jobs from<BR>> >=20 brokerage<BR>> > > houses are to soften the tone of bad news. = They=20 can even make it sound<BR>> > good.<BR>> > > Sure there = are=20 stocks out there that the savvy trader may pick, but on<BR>> > = >=20 average not. It takes months to years for rate and tax cuts to=20 filter<BR>into<BR>> > > the economy.<BR>> > = ><BR>> >=20 > DanF<BR>> > ><BR>> > ><BR>> > > ----- = Original=20 Message -----<BR>> > > From: "Kent Norman" <<A=20 = href=3D"mailto:kent_norman@yahoo.com">kent_norman@yahoo.com</A>><BR>&g= t; >=20 > To: "CANSLIM" <<A=20 = href=3D"mailto:canslim@xmission.com">canslim@xmission.com</A>><BR>>= >=20 > Sent: Sunday, January 13, 2002 10:11 AM<BR>> > > = Subject:=20 [CANSLIM] market direction<BR>> > ><BR>> > ><BR>> = >=20 > > Many "experts" are expecting the market to follow<BR>> = > >=20 > tradition and rise in January and go flat to down for<BR>> = > >=20 > a few months. Do you think this weeks 5 down days are<BR>> = > >=20 > meaningful?<BR>> > > ><BR>> > > > I know = WON says=20 we don't need to be concerned with<BR>> > > > where the = market is=20 heading, just where it is.<BR>> > > ><BR>> > > = > So=20 where is it? Is the party over? Should we all get<BR>> > > = > out=20 of the pool?<BR>> > > ><BR>> > > > Kent = Norman<BR>>=20 > > ><BR>> > > ><BR>> > > > = =3D=3D=3D=3D=3D<BR>>=20 > > > Opportunities always look bigger going than = coming.<BR>>=20 > > ><BR>> > > >=20 __________________________________________________<BR>> > > = > Do=20 You Yahoo!?<BR>> > > > Send FREE video emails in Yahoo!=20 Mail!<BR>> > > > <A=20 = href=3D"http://promo.yahoo.com/videomail/">http://promo.yahoo.com/videoma= il/</A><BR>>=20 > > ><BR>> > > > -<BR>> > > > -To=20 subscribe/unsubscribe, email "<A=20 = href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>"<BR>>= ; >=20 > > -In the email body, write "subscribe canslim" or<BR>> = > >=20 > -"unsubscribe canslim". Do not use quotes in your = email.<BR>>=20 > > ><BR>> > ><BR>> > ><BR>> > > = - -<BR>>=20 > > -To subscribe/unsubscribe, email "<A=20 = href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>"<BR>>= ; >=20 > -In the email body, write "subscribe canslim" or<BR>> > = >=20 -"unsubscribe canslim". Do not use quotes in your email.<BR>> = >=20 ><BR>> ><BR>> ><BR>> > -<BR>> > -To=20 subscribe/unsubscribe, email "<A=20 = href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>"<BR>>= ; >=20 -In the email body, write "subscribe canslim" or<BR>> > = - -"unsubscribe=20 canslim". Do not use quotes in your email.<BR>><BR>> = - -<BR>> -To=20 subscribe/unsubscribe, email "<A=20 = href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>"<BR>>= ; -In=20 the email body, write "subscribe canslim" or<BR>> -"unsubscribe=20 canslim". Do not use quotes in your = email.<BR>><BR><BR><BR>-<BR>-To=20 subscribe/unsubscribe, email "<A=20 = href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>"<BR>-In= the=20 email body, write "subscribe canslim" or<BR>-"unsubscribe = canslim". Do=20 not use quotes in your email.</BLOCKQUOTE></BODY></HTML> - ------=_NextPart_000_00EC_01C19C2B.05C04CE0-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email.
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