Thursday, November 29, 2007


Nasdaq 100's top 25 PEG Plays.

#7 and #8 are two of my larger holdings (I've been adding to). This is part of why I like their valuations right now.

The "PEG" is the ratio of a company's PE ratio to the earnings growth rate of the company. So if a company has a PE of 30 and an earnings growth rate of 20, then the PE would be 30 / 20 = 1.5. All else being equal you like lower PEGs because you're buying earnings growth at a discount.

The first place I heard about the PEG ratio was in Peter Lynch's book "One Up on Wallstreet," and he's credited with its widespread popularity as a valuation rule-of-thumb.

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