Look For Companies With Low Price-to-Earnings Ratios

Feb. 9, 2024 | RedChip Companies

Study companies in an industry and determine which ones are still trading inefficiently, lower than their peer-group P/E multiples. Secondly, check their year-over-year and quarterly earnings and revenue growth. Go back at least eight quarters and look for trends, consistency or inconsistencies in their year-over-year and quarterly growth rates. If the fundamentals are stable and there are no indications that their business is faltering, then chances are the stock, at some point in time, will trade somewhere near the peer group P/E average.

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  • Bob McCooey, Senior Vice President, NASDAQ Stock Market