Company P/E ratio and other data

[bpcw]

What do people think of the importance of a good P/E ratio and other fundamentals for companies we invest in in this current environment. For example, in a very bullish environment, share prices in companies that are more speculative can perform spectacularly but in a bearish market there tends to be a return to value (companies with good profits, cash flow etc.).

I currently have as part of my portfolio, good companies such as Meta with a P/E of around 10, alongside a few with a negative P/E meaning their losing money or with a very high value. Is it worth selling the companies with poor fundamentals and purchasing good ones or are the more speculative plays likely to roar back into life? What are other's doing?

[MarkD]

Just following the leader with regard to individual stocks. Swinging index funds. I never was able to make any money on fundamentals.

[Centeron631]

bcpw a fellow member in my local shareclub wrote this to me about 1.5 yrs ago in reference to Fortinet a stock i still own. Does this make any sense or help (as a bit uncertain myself)? I have repeated asked Ti what they use other than the charts/ta to select the companies and their entry and exit points if anything but have yet to see a clear answer.

He wrote "Another way of looking at it that for a high growth company is having a PEG equal to one. That is the method use by Peter Lynch. So that means that a fair PE ratio should equal the annual growth rate in earnings, which according to below is 24.67%. So a fair PE is about 25. It is now 63.61, which is a bit stretched."

[SOL]

Just following the leader with regard to individual stocks. Swinging index funds. I never was able to make any money on fundamentals.

@centeron and Bpcw I would listen to mark more than most because he has something that few have, Market experience, He has been through these situations before. Other individuals and there are many that slip my mind for the moment are Budge, Harry, etc. Experience generally trumps raw knowledge when it comes to the markets. I am not putting my name up there because I feel it's unbecoming to promote oneself.

P/E is pushed a lot but look at any long-term chart and you will see when the markets are trending up, companies that deserve to be shot can and will in most cases perform way better than those stable companies with nice P/E ratios. Understand also that share buybacks can be used to alter the P/E ratio. So you have a company with a low P/E ratio but no one digs deep to find out that they have done this by selling mountains of debt.

We don't focus too much on fundamentals. We look at unusual insider action, unusual short interest ratio, and to some degree the PS ratio (price to sales ratio). You can do that here

https://www.zacks.com/stock/chart/klic/ ... -ratio-ttm

Generally, lower price ratios are good as you can see in the above chart


Here is a PS chart of Fortinent (FTNT)

https://www.zacks.com/stock/chart/ftnt/ ... -ratio-ttm

It looks pretty decent from a long term perspective and the stock has been remarkably resilient which means on the next leg up it will be double in price at a faster pace than its peers. However, if you need cash one option would be to sell the shares and wait for the Dow to shed a cumulative of 1000 to 1500 points, and then sell puts in 35 to 40 ranges with one year time premium.

My arm is finally feeling better so I have to continue on two updates that are delayed due to a mild arm injury in the gym, that made typing a bit more difficult.

[bpcw]

Thanks Sol, that's the kind of response I was looking for, I wasn't criticising, the question came to mind as another guy I and others follow and you respect mentions PE and other fundamentals all the time and also prompted by TT's post.

Your track record over the long term is excellent so I'm not going to be highly critical over what is unprecedented times with the amounts of money involved in the markets and therefore short term manipulation.

I'm also pretty much at peace that all will come good with patience and sensible investments.

I'm mainly in tax free wrappers which don't allow option trading and I'm a bit reluctant to go down that route to be honest.

Thanks for the great service and praying the arm recovers speedily.

[SOL]

Thanks Sol, that's the kind of response I was looking for, I wasn't criticising, the question came to mind as another guy I and others follow and you respect mentions PE and other fundamentals all the time and also prompted by TT's post.

Your track record over the long term is excellent so I'm not going to be highly critical over what is unprecedented times with the amounts of money involved in the markets and therefore short term manipulation.

I'm also pretty much at peace that all will come good with patience and sensible investments.

I'm mainly in tax free wrappers which don't allow option trading and I'm a bit reluctant to go down that route to be honest.

Thanks for the great service and praying the arm recovers speedily.

I did not take it as criticism, I viewed it as someone looking for an answer to a question.

If we're shorting the markets while they were surging upwards, I would say that the odds of us recovering would be less than 20%. A short position that's in the red in an upward-trending market is very hard to recoup from. But the same statement does not hold true when you are long in a market experiencing a strong correction. Otherwise, buffet and other long-term investors would be broke by now. Markets always trend higher, and disasters always lead to opportunities. A short position in the red causes pain and the odds are low of recouping are slim; a long position in the red causes pain, but the odds are very high of recouping everything and more, as long as one did not deploy all their funds into speculative companies only.


We have also paid heed to the criticism, and noticeable changes will be seen in the next and upcoming issues.
For example, we will now no longer assume that individuals are following all the rules. Instead, as soon as the long-term outlook changes, all low to medium risk traders will be told to start building up cash until cash compromises 50% of their portfolios.

[bpcw]

bcpw a fellow member in my local shareclub wrote this to me about 1.5 yrs ago in reference to Fortinet a stock i still own. Does this make any sense or help (as a bit uncertain myself)? I have repeated asked Ti what they use other than the charts/ta to select the companies and their entry and exit points if anything but have yet to see a clear answer.

He wrote "Another way of looking at it that for a high growth company is having a PEG equal to one. That is the method use by Peter Lynch. So that means that a fair PE ratio should equal the annual growth rate in earnings, which according to below is 24.67%. So a fair PE is about 25. It is now 63.61, which is a bit stretched."

Thanks for the info, I did look it up, will bear it in mind!

[MarkD]

Just following the leader with regard to individual stocks. Swinging index funds. I never was able to make any money on fundamentals.

@centeron and Bpcw I would listen to mark more than most because he has something that few have, Market experience, He has been through these situations before. Other individuals and there are many that slip my mind for the moment are Budge, Harry, etc. Experience generally trumps raw knowledge when it comes to the markets. I am not putting my name up there because I feel it's unbecoming to promote oneself.

P/E is pushed a lot but look at any long-term chart and you will see when the markets are trending up, companies that deserve to be shot can and will in most cases perform way better than those stable companies with nice P/E ratios. Understand also that share buybacks can be used to alter the P/E ratio. So you have a company with a low P/E ratio but no one digs deep to find out that they have done this by selling mountains of debt.

We don't focus too much on fundamentals. We look at unusual insider action, unusual short interest ratio, and to some degree the PS ratio (price to sales ratio). You can do that here

https://www.zacks.com/stock/chart/klic/ ... -ratio-ttm

Generally, lower price ratios are good as you can see in the above chart


Here is a PS chart of Fortinent (FTNT)

https://www.zacks.com/stock/chart/ftnt/ ... -ratio-ttm

It looks pretty decent from a long term perspective and the stock has been remarkably resilient which means on the next leg up it will be double in price at a faster pace than its peers. However, if you need cash one option would be to sell the shares and wait for the Dow to shed a cumulative of 1000 to 1500 points, and then sell puts in 35 to 40 ranges with one year time premium.

My arm is finally feeling better so I have to continue on two updates that are delayed due to a mild arm injury in the gym, that made typing a bit more difficult.

I appreciate the kudos from you Sol. But experience doesn't always mean success. I have screwed up a bunch and still do. But I am getting less anxious about the entire gig since I began following TI. My biggest concern is being too laisez faire at times.

IF, I had found TI much earlier, I suspect I would be quite a bit wealthier atm. Not that it matters tbh. Money (enough) is freedom as many have noted. For those here who are middle aged or younger, I suggest the words of Warren Zevon, "Enjoy every sandwich."

My casual approach also might be due to arterial stent surgery from a decade or so back. Hairy (er, Harry) would appreciate something about shaved privates and the end of modesty. And a male nurse who appeared to be much too interested, "nuff said.

[Triplethought]

My arm is finally feeling better so I have to continue on two updates that are delayed due to a mild arm injury in the gym, that made typing a bit more difficult.

You know, one of my original back injuries was at the gym, as well as both sciatic herniations requiring surgery (on the stationary bike grinding too hard). I wonder if one did a survey of significant life injuries (the kind that never really heal completely and ache years later) how many would have occurred in the Gym.

If we add to that outdoor recreation - such as blowing out knees on the ski hill etc I bet we'd find that on average the things we do to improve our health and have fun contribute significantly to our poor health.

[bpcw]

My arm is finally feeling better so I have to continue on two updates that are delayed due to a mild arm injury in the gym, that made typing a bit more difficult.

You know, one of my original back injuries was at the gym, as well as both sciatic herniations requiring surgery (on the stationary bike grinding too hard). I wonder if one did a survey of significant life injuries (the kind that never really heal completely and ache years later) how many would have occurred in the Gym.

If we add to that outdoor recreation - such as blowing out knees on the ski hill etc I bet we'd find that on average the things we do to improve our health and have fun contribute significantly to our poor health.

My knees aren't great from pounding the roads running for years!

This post was supposed to be about pe ratios but I guess in the UK in schools it stands for physical education so guess it's ok!

[SOL]

My arm is finally feeling better so I have to continue on two updates that are delayed due to a mild arm injury in the gym, that made typing a bit more difficult.

You know, one of my original back injuries was at the gym, as well as both sciatic herniations requiring surgery (on the stationary bike grinding too hard). I wonder if one did a survey of significant life injuries (the kind that never really heal completely and ache years later) how many would have occurred in the Gym.

If we add to that outdoor recreation - such as blowing out knees on the ski hill etc I bet we'd find that on average the things we do to improve our health and have fun contribute significantly to our poor health.

You bring up a good point and perhaps it is another reason that most centenarians never mention that extreme sports or workouts, etc helped them live so long.

[Centeron631]

Just following the leader with regard to individual stocks. Swinging index funds. I never was able to make any money on fundamentals.

@centeron and Bpcw I would listen to mark more than most because he has something that few have, Market experience, He has been through these situations before. Other individuals and there are many that slip my mind for the moment are Budge, Harry, etc. Experience generally trumps raw knowledge when it comes to the markets. I am not putting my name up there because I feel it's unbecoming to promote oneself.

P/E is pushed a lot but look at any long-term chart and you will see when the markets are trending up, companies that deserve to be shot can and will in most cases perform way better than those stable companies with nice P/E ratios. Understand also that share buybacks can be used to alter the P/E ratio. So you have a company with a low P/E ratio but no one digs deep to find out that they have done this by selling mountains of debt.

We don't focus too much on fundamentals. We look at unusual insider action, unusual short interest ratio, and to some degree the PS ratio (price to sales ratio). You can do that here

https://www.zacks.com/stock/chart/klic/ ... -ratio-ttm

Generally, lower price ratios are good as you can see in the above chart


Here is a PS chart of Fortinent (FTNT)

https://www.zacks.com/stock/chart/ftnt/ ... -ratio-ttm

It looks pretty decent from a long term perspective and the stock has been remarkably resilient which means on the next leg up it will be double in price at a faster pace than its peers. However, if you need cash one option would be to sell the shares and wait for the Dow to shed a cumulative of 1000 to 1500 points, and then sell puts in 35 to 40 ranges with one year time premium.

My arm is finally feeling better so I have to continue on two updates that are delayed due to a mild arm injury in the gym, that made typing a bit more difficult.

Sol thks for informing the things u look at for selecting stocks and deselecting stocks (i am amazed how may services/commentators out there r willing to give buy recos but extremely few sell recos (probably at least 100 to 1). Do u even look at any news about the company eg. some scandal or new contracts winning or old ones losing order backlogs or missed earnings or Its particular industry in ur decisions? as some of those seems to be nb.

As to fortinet it is in a taxable account with still a fairly sizeable unrealized cap gain AND one cannot ignore the DIFF when seeing advice to sell the size of the tax bill (25% in canada) in making the decision ( i would like to hear ur op on doing this from a money management point of view eg would it be worth it to do that to go to somewhere less risky more upside eg put into a commodities sector which is so beaten down that is almost invevitable to reap huge gains in next 5 years). But on the other hand one could not sell puts in a registered account at least in Canada. Right now i agree i should raise more cash but my mind goes to selling off companies that r duds with little or no hope of coming back and taking the tax loss there but do not know which ones they r or where is the best place to find out.

was going to put a chart here but cannot seem to copy it so url of whole article see chart page 15 comparing commodities cycle to tech cycle https://marathonresourceadvisors.com/wp ... o,-158,603. Another comment I received from a new friend was that the total cap of Apple is greater than the total of the SP500 energy index by a healthy margin and this has made me nervous again - as the conclusion I jumped to is that Apple sure has room for a long fall if it is so inclined and may take its buddies with this elexiur of Eden.

ps is the Zacks url's part of paid sub or a free portion of their site? tks

[SOL]

Sol thks for informing the things u look at for selecting stocks and deselecting stocks (i am amazed how may services/commentators out there r willing to give buy recos but extremely few sell recos (probably at least 100 to 1). Do u even look at any news about the company eg. some scandal or new contracts winning or old ones losing order backlogs or missed earnings or Its particular industry in ur decisions? as some of those seems to be nb.

When it comes to any news-related event, once it comes out, its almost always too late to do anything other than run with the crowd.

As to fortinet it is in a taxable account with still a fairly sizeable unrealized cap gain AND one cannot ignore the DIFF when seeing advice to sell the size of the tax bill (25% in canada) in making the decision ( i would like to hear ur op on doing this from a money management point of view eg would it be worth it to do that to go to somewhere less risky more upside eg put into a commodities sector which is so beaten down that is almost invevitable to reap huge gains in next 5 years). But on the other hand one could not sell puts in a registered account at least in Canada. Right now i agree i should raise more cash but my mind goes to selling off companies that r duds with little or no hope of coming back and taking the tax loss there but do not know which ones they r or where is the best place to find out.

That is a really hard question for me to answer. I think someone smarter than I will have to attempt this one. There are so many variables at play. However, I can say this. looking at email exchanges with subscribers over the years, I noticed that many of the laggards and the strong hands performed well over the years. In fact, many regretted selling the laggards. The interesting part was those plays that fell into the middle range, they were not strong stocks based on price momentum, but these plays were generally handily trounced by the laggards.

was going to put a chart here but cannot seem to copy it so url of whole article see chart page 15 comparing commodities cycle to tech cycle https://marathonresourceadvisors.com/wp ... o,-158,603. Another comment I received from a new friend was that the total cap of Apple is greater than the total of the SP500 energy index by a healthy margin and this has made me nervous again - as the conclusion I jumped to is that Apple sure has room for a long fall if it is so inclined and may take its buddies with this elexiur of Eden.

APPL's size is an indication of the future power of AI and the tech trend. The trillion dollar arena will be dominated by tech giants within the next 24 to 45 months.

ps is the Zacks url's part of paid sub or a free portion of their site? tks

Yes its free, just enter a different symbol to pull up a new chart, plus you can choose from a host of other metrics, it even includes P/E ratio. Just click on the drop down menu