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IS STOCK TRADING ON HIGH PRICE EARNINGS (P/E) RATIO A GOOD STOCK OR NOT?

“Average P/E ratios (24/5 – 15/10/2018) of Kellog, Alphabet Inc. (Google) and Facebook are 15.76, 50.63 and 21.23 respectively. Which stock is better?”

Determining which of the above stock is better requires valuation of the stocks to arrive at value, which is a cardinal tenet in investment, which is to ensure you do not pay more than what an asset, project or a business is really worth.  Analysts deploy different valuation models and/or combination of models to arrive at a conclusion that an investment/asset is either overvalued or undervalued.  Some models are easier to use than others vis-à-vis the asset class under valuation. However, irrespective of the asset class being valued vis-à-vis technique, remarkably, there is a degree of similarity in basic principles. – Read more here – .http://optionxpress.com.ng/resources-documents/

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