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Explain Can You Judge Whether The Stock Is Expensive By Looking At Its Price? |
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Answer» Looking just at its price you cannot judge the stock price, a $200 stock can be CHEAP if the company’s earnings prospects are high enough, while a $10 stock can be EXPENSIVE if earning potential is low. The P/E RATIO is the correct judge of the VALUATION of the stock. Looking just at its price you cannot judge the stock price, a $200 stock can be cheap if the company’s earnings prospects are high enough, while a $10 stock can be expensive if earning potential is low. The P/E ratio is the correct judge of the valuation of the stock. |
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