What would you think of a High-tech stock with a P/E of 4.6?

[GreenBeret]

I'm thinking the P should go up some, but NOOooooooooooooo, not AMD.

 

[Russ]

Patience is a virtue.

Russ, NCNE

 

[notfred]

I took PE in high school.. didn't get a 4.6 though.

 

[Bernie2]

The P/E based on projected earnings is much higher. You would still have to think that long-term its a deal.

 

[GreenBeret]

Actually Russ, I bought it 1 (2?) years ago at 20 (pre-split). Then it hit it's peak of 90+ (45+ post-split) I was on vacation and couldn't sell. I should have sold when I got back, at around 80-85, but was hoping it would go back up. So now I'm waiting.... and waiting.... This is my first experience with stocks, so it is a learning experience to be sure. I'm still breaking even at current prices though.

 

[A5]

The stock market is good for long term investments. Don't even think about selling during this time...see where we are in 5-10 years

 

[Random Variable]

At least the P/E ratio is positive

EDIT: A high P/E ratio is no good either because it means that the stock is overvalued

 

[Superdoopercooper]

Right now... P/E means SQUAT!!! There is so much irrationality going on right now.... and so little profits being made... that P/E is just not a good indicator.

Pay close attention to Price/Sales, Revenue/Employee, Cash-on-hand, and.... well, I'm sure there are a lot more... but these are some important ones. Price to forward looking earnings is also a better one than just P/E.

Right now, for a DIGITAL company, such as AMD.... Price/Sales is between 1x and 4x. So.... take MarketCap/YearlyRevenue.... == 1x - 4x. I don't know what it is right now for AMD... but I'm thinking its probably around 2x - 3x.

For a mixed-signal IC company, such as TI or Analog Devices... I bet the number is closer to 5x or 10x.

Rev/Employee is pretty good at $250k/employee.... smoking if closer to $500k/employee. Check out the cash position too.... if the company is valued at $2/share... but the company has $3/share cash in the bank... well, you know that either there are some phony numbers in the accounting thing, or that the company has been unjustly beat down (this is an extreme case, but you get the picture).

Hope this helps.

DISCLAIMER: I am not a stock broker/trader, am not involved in professional trading, etc. Please do your own research. The above suggestions/comments may or may not help/improve your trading strategy.

 

[Russ]

GreenBeret,

Don't worry, it'll come back. I bought it at 13 and change in the spring of '99 and sold it, well I won't tell you what it was at because you'll just feel bad.

Hang on to it, wait for it to get back to where it should be. Just don't be a pig, as pigs go to the staughterhouse. When it gets to a level that gives you a solid return, (above the S&P 500), for the period that you've held, then take a serious look at selling.

Russ, NCNE