Page 1094 - How to Make Money in Stocks Trilogy

80 HOW TO MAKE MONEY IN STOCKS—GETTING STARTED

What About the P/E Ratio?

Price/Earnings (P/E) Ratio
Priceline.com Expedia
21 18

In Chapter 2, we already discussed why P/E ratios are not an important fac-
tor when it comes to deciding what stocks to buy. In fact, investors who only
buy stocks with low P/E ratios and never buy ones with so-called “high”
P/Es will miss out on virtually every big winner.
So ask yourself: After seeing everything else we just covered about these
two companies, would you buy Expedia just because it had a lower P/E ratio?

What Happened Next?

Do you see how it quickly becomes obvious which stock is stronger as you
go through the checklist? No guesswork—just the facts. And the more you
do it, the quicker and easier it gets.
The difference in the gains that followed proves the payoff for using the
Buying Checklist can be life-changing.

Subsequent Gains for Priceline.com and Expedia
Priceline vs Expedia Priceline 433
July 2009 - March 2011 421
331% 397
409
385
373
361
349
337
325
313
301
289
277
265
253
Expedia 241
229
38% 217
205
193
181
169
157
145
133
121
109 © 2013 Investor’s Business Daily, Inc.
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Next up: Now it’s your turn to review 2 stocks and decide which one has
more potential.