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  • mikebert mikebert May 6, 1998 7:13 AM Flag

    Another way to look at it

    Here's another way to chart the stock. Instead of
    plotting the stock price, try plotting the P/E and
    trailing annual EPS growth rate. I did this for ANLT.
    Interestingly, the P/E and EPS growth functions were not
    particularly related to each other.

    Of more interest
    was that the P/E showed a rising trend that looked
    like a stock price chart, but with somewhat wider
    swings. This is not surprising as P/E is simply another
    way to present the same information as the stock
    price, simply with a coordinate transformation.
    (Plotting stock price on a semi-log graph instead of a
    regular graph is an analogous transformation that is
    commonly used to bring more meaning to price trendline

    I tried straightforward trendline analysis with the
    P/E, much as you would with a price plot. There is a
    fairly good trendline that runs throught the bottoms.
    This trendline predicts a P/E of ca. 28 for the
    current period. With EPS of 0.86 this suggests a stock
    price of ca. 24 as the bottom.

    The regression
    line through the P/E data is consistent with a price
    of about 33. This suggests buying below 33 during
    this quarter is good entry point for long-term

    I wonder if other TA tools may give
    interesting results with a P/E plot. Anyone ever do anything
    like this?

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    • Amid all this turmoil I'd expect some indication
      from the analysts that have been onboard of renewed or
      eroded confidence
      and hope for some new positions to
      be taken by analysts on the
      sidelines. The fact
      there has been NOTHING from either and that the company
      remains moot hardly instills confidence.

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