Re: PE Expansion (was Re: [CANSLIM] SYK)

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: PE Expansion (was Re: [CANSLIM] SYK)
Date: Mon, 25 Mar 2002 07:26:18 -0600
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Oops...correct links are

http://WallStreet-LLC.com/pub/PEtoFcstSell.JPG

http://WallStreet-LLC.com/pub/PEExpansion.JPG

Katherine
    ----- Original Message -----=20
    From: Katherine Malm=20
    To: canslim@lists.xmission.com=20
    Sent: Sunday, March 24, 2002 7:11 PM
    Subject: PE Expansion (was Re: [CANSLIM] SYK)


    Thought I'd add to the resource that jans provided by uploading a =
couple of Investor's Corner articles on using PE for targeting sells:

    (1) Use P-E Ratio Growth To Forecast Sell Point (7/17/01)   =
http://WallStreet-LLC.com/pub/PEtoFcstSell.jpg

    (2) Track Stock's P-E Expansion to Size Up Gains (6/9/00)   =
http://WallStreet-LLC.com/pub/PEExpansion.jpg

    Katherine
      ----- Original Message -----=20
      From: Spencer48@aol.com=20
      To: canslim@lists.xmission.com=20
      Sent: Wednesday, March 20, 2002 1:30 PM
      Subject: Re: [CANSLIM] SYK


      Katherine:

           Your E-mail on P/E reminded me that WON sometimes uses the =
P/E ratio to=20
      guage when to sell the stock.  Here is what he said June 4, 2001 =
in Ask WON=20
      (on investors.com)  regarding P/E vis =E0 vis selling: =20
           "Your sell rules are the principal guide on when to take a =
profit. But=20
      sometimes we use the price/earnings ratio to calculate a price =
where you may=20
      exit a stock. Basically, you may start considering selling when =
the stock's=20
      PE ratio expands 130% from the time it broke out from a =
first-stage base.=20
      Example: XYZ stock's PE (or p/e ) ratio is 45 when it breaks out. =
Calculating=20
      a 130% expansion, you get a PE of 103.5 [45*1.3 +original45PE]]. =
Next, you=20
      take the next year's expected earnings per share and calculate the =
target=20
      price from the estimated EPS. If the estimated EPS is $2, the =
target price=20
      would be $207 ($2 x 103.5). However, you should use this method =
only with the=20
      No.1 stock in a group and only in a first-stage base."

      jans=20


      In a message dated 3/20/2002 11:55:41 AM Eastern Standard Time,=20
      kmalm@earthlink.net writes:

      << WON's studies from 1953 to 1985 showed that the average =
trailing PE for=20
      great growth stocks was 20. When they peaked, they averaged a =
trailing PE of=20
      45, 2.25 the original levels. They then screened the best stocks =
going into=20
      the market peak in March 2000 and found that the average PE when =
they broke=20
      out was 44.8. When they peaked, they averaged a PE of 99.6, =
surprisingly, 2.2=20
      times their PE on breakout. (Investor's Corner 6/9/00) His =
conclusion is that=20
      this does give some range of expectation for PE expansion during =
the stock's=20
      run. >>

      -
      -To subscribe/unsubscribe, email "majordomo@xmission.com"
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<DIV>
<DIV>Oops...correct links are</DIV>
<DIV>&nbsp;</DIV>
<DIV><A=20
href=3D"http://WallStreet-LLC.com/pub/PEtoFcstSell.JPG">http://WallStreet=
- -LLC.com/pub/PEtoFcstSell.JPG</A></DIV>
<DIV>&nbsp;</DIV>
<DIV><A=20
href=3D"http://WallStreet-LLC.com/pub/PEExpansion.JPG">http://WallStreet-=
LLC.com/pub/PEExpansion.JPG</A></DIV>
<DIV>&nbsp;</DIV>
<DIV>Katherine</DIV></DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
  <BLOCKQUOTE dir=3Dltr=20
  style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
    <DIV style=3D"FONT: 10pt arial">----- Original Message -----=20
    <DIV style=3D"BACKGROUND: #e4e4e4; font-color: black"><B>From:</B> =
<A=20
    title=3Dkmalm@earthlink.net =
href=3D"mailto:kmalm@earthlink.net">Katherine=20
    Malm</A> </DIV>
    <DIV><B>To:</B> <A title=3Dcanslim@lists.xmission.com=20
    =
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
=20
    </DIV>
    <DIV><B>Sent:</B> Sunday, March 24, 2002 7:11 PM</DIV>
    <DIV><B>Subject:</B> PE Expansion (was Re: [CANSLIM] =
SYK)</DIV></DIV>
    <DIV><BR></DIV>
    <DIV>Thought I'd add to the resource that jans provided by uploading =
a=20
    couple of Investor's Corner articles on using PE for targeting =
sells:</DIV>
    <DIV>&nbsp;</DIV>
    <DIV>(1) Use P-E Ratio Growth To Forecast Sell Point =
(7/17/01)&nbsp;&nbsp;=20
    <A=20
    =
href=3D"http://WallStreet-LLC.com/pub/PEtoFcstSell.jpg">http://WallStreet=
- -LLC.com/pub/PEtoFcstSell.jpg</A></DIV>
    <DIV>&nbsp;</DIV>
    <DIV>(2) Track Stock's P-E Expansion to Size Up Gains =
(6/9/00)&nbsp;&nbsp;=20
    <A=20
    =
href=3D"http://WallStreet-LLC.com/pub/PEExpansion.jpg">http://WallStreet-=
LLC.com/pub/PEExpansion.jpg</A></DIV>
    <DIV>&nbsp;</DIV>
    <DIV>Katherine</DIV>
    <BLOCKQUOTE=20
    style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
      <DIV style=3D"FONT: 10pt arial">----- Original Message ----- =
</DIV>
      <DIV=20
      style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
      <A title=3DSpencer48@aol.com=20
      href=3D"mailto:Spencer48@aol.com">Spencer48@aol.com</A> </DIV>
      <DIV style=3D"FONT: 10pt arial"><B>To:</B> <A=20
      title=3Dcanslim@lists.xmission.com=20
      =
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
=20
      </DIV>
      <DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Wednesday, March 20, =
2002 1:30=20
      PM</DIV>
      <DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] =
SYK</DIV>
      <DIV><BR></DIV>Katherine:<BR><BR>&nbsp;&nbsp;&nbsp;&nbsp; Your =
E-mail on=20
      P/E reminded me that WON sometimes uses the P/E ratio to <BR>guage =
when to=20
      sell the stock.&nbsp; Here is what he said June 4, 2001 in Ask WON =
<BR>(on=20
      investors.com)&nbsp; regarding P/E vis =E0 vis selling:&nbsp;=20
      <BR>&nbsp;&nbsp;&nbsp;&nbsp; "Your sell rules are the principal =
guide on=20
      when to take a profit. But <BR>sometimes we use the price/earnings =
ratio=20
      to calculate a price where you may <BR>exit a stock. Basically, =
you may=20
      start considering selling when the stock's <BR>PE ratio expands =
130% from=20
      the time it broke out from a first-stage base. <BR>Example: XYZ =
stock's PE=20
      (or p/e ) ratio is 45 when it breaks out. Calculating <BR>a 130%=20
      expansion, you get a PE of 103.5 [45*1.3 +original45PE]]. Next, =
you=20
      <BR>take the next year's expected earnings per share and calculate =
the=20
      target <BR>price from the estimated EPS. If the estimated EPS is =
$2, the=20
      target price <BR>would be $207 ($2 x 103.5). However, you should =
use this=20
      method only with the <BR>No.1 stock in a group and only in a =
first-stage=20
      base."<BR><BR>jans <BR><BR><BR>In a message dated 3/20/2002 =
11:55:41 AM=20
      Eastern Standard Time, <BR><A=20
      href=3D"mailto:kmalm@earthlink.net">kmalm@earthlink.net</A>=20
      writes:<BR><BR>&lt;&lt; WON's studies from 1953 to 1985 showed =
that the=20
      average trailing PE for <BR>great growth stocks was 20. When they =
peaked,=20
      they averaged a trailing PE of <BR>45, 2.25 the original levels. =
They then=20
      screened the best stocks going into <BR>the market peak in March =
2000 and=20
      found that the average PE when they broke <BR>out was 44.8. When =
they=20
      peaked, they averaged a PE of 99.6, surprisingly, 2.2 <BR>times =
their PE=20
      on breakout. (Investor's Corner 6/9/00) His conclusion is that =
<BR>this=20
      does give some range of expectation for PE expansion during the =
stock's=20
      <BR>run. &gt;&gt;<BR><BR>-<BR>-To subscribe/unsubscribe, email "<A =

      =
href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>"<BR>-In=
=20
      the email body, write "subscribe canslim" or<BR>-"unsubscribe=20
      canslim".&nbsp; Do not use quotes in your=20
email.</BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BODY></HTML>

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