![]() This is why Tesla ( NASDAQ: TSLA) trades at a much higher valuation (88.5x P/E) than Ford ( NYSE: F) (4.2x P/E). Future Outlook – What is the stock’s potential?Ī large part of any stock’s current valuation is investors’ expectations of its future growth. In the context of its growth rate and peer valuations, the P/E of 15x may indicate now is a great time to buy ABC. If, however, it has a P/E of 15x and its revenue and earnings are expected to grow at 50% per year for several years and its peers are trading at P/E ratios of 30x and are only expected to grow at 20% per year, ABC could increase more than threefold before it’s correctly valued. If you see stock ABC has a P/E of 15x, that doesn’t tell you much. Instead, they indicate which companies are being valued either higher or lower than their peers based on the expectations of their future growth. ![]() It should be noted: Valuation ratios alone don’t necessarily signal when you should buy a stock or sell a stock. The most common way to value stocks is by using relative valuation ratios, such as the P/E, P/S, P/B, and PEG ratios: Current Valuation – How is the stock priced? Here’s an overview of the 3 categories I look at when evaluating potential investments: 1. What makes a stock’s price “fair” or “better” than fair? Identifying great companies at fair or better prices The article linked above dives into the specifics and tactical-side of these points (and how WallStreetZen can help you all along the way), but I’ll add some additional context here. When companies meet those 2 criteria, that’s the best time to buy stocks. The long-and-short of when to invest in stocks is two-fold: Read more: How to Know What Stocks to Buy I’ve already written an article on how to know what stocks to buy that covers the investment strategy I follow, value investing: If you like what I have to say, thank them, not me. These aren’t my own rules – I’ve got them from reading every book I can get my hands on about legendary investors like Warren Buffett, Benjamin Graham, and Peter Lynch. If you were to ask me about my investing style and how I determine when to buy and when to sell stocks, I would share these general rules of thumb. The good news is the more time you spend buying and selling stocks the better you’ll become at knowing when you should. The truth is, there’s no way to know for sure when is the best time to buy stocks or when is the best time to sell stocks – investing is as much art as it is science. Those are pretty big issues, given that how to know when to buy and sell stocks is the entirety of the investing process. Commissions do not affect the opinions or evaluations of our editorial team. ![]() ![]() Our company, WallStreetZen Limited, is supported by our user community and may receive a small commission when purchases are made through partner links. Top travel tip: Book in advance, pack light, download movies and booksĭon’t miss out on ET Prime stories! Get your daily dose of business updates on WhatsApp.Our editorial team uses a strict editorial review process to compile all reviews, research, and evaluations of any kind. The wilderness was also fascinating, with pumas wandering not far from where we were staying.Ī journey you had to cut short: A house-boat trip in Kerala with my wife because our pup fell ill The climb, while exhausting, was pristine. It was exhilarating to hike in the rugged terrains of Patagonia. It was nice to be in the open again and meet new peopleĪ place that you love to return to over and over again: Paris – I love the vibe of the place. My family loves the ocean and I like to dive. “After experiencing the polite efficiency of Japan and the general queue etiquette of most European countries, it is annoying to go to some places where people disregard lines”įirst trip post the pandemic: Maldives. If asked about his travel pet peeves, Dr Subramanyam has just one – queue jumpers. Dr Subramanyam recalls once almost missing a flight in Berlin, one of his favourite cities, because his colleagues and him spent the entire night out unwinding “after an intense and fruitful corporate event”. But even the best of planners have an off day.
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