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Simply because the P/E for a sector or individual stocks is high does not necessarily mean the sector or stock is overvalued. Importantly, the P/E should be compared to the earnings growth rate for each sector or company. By dividing the P/E by the earnings growth rate, one obtains the PEG ratio (PE to growth rate.) This article compares each sector’s P/Es to each sector’s PEG ratio and comments on which sectors are over and under valued.
Read More »PEG Ratio Helps Identify Over & Under Valued Sectors & Stocks
