One of my favorite ways to find “GAARP” Growth At A Reasonable Price, is with the PEG ratio. Price / Earnings to Growth ratio. Not just price of earnings, but leavened with a growth aspect. When you can get good earnings growth, at a reasonable price, and hold it, well, things grow and often folks start to ‘pay up’ for it and you get a double bonus.
So I looked at a PEG heat map. There’s a whole lotta red on this thing:
There’s a whole lot a red there, and not much green. (Click on it for a much bigger version)
AAPL Apple, C Citibank, F Ford, GM, GILD Gilead, FOX news class A, and Valero (honorable mention Marathon Oil).
Again, not a big theme. The consumer isn’t dead, and is finally buying an iPhone and a car upgrade and with cheap oil, driving somewhere for the holidays. Putting it on their Citi card. Oh, and FOX is a better deal than CNN, but even Time Warner isn’t dead in an election year.
Somehow I’m not ‘feeling the love’ that the economy will thrive and the stock market soar on iPhones, cars, and watching more TV. All on the credit card… nor that those trends can go on for a long time with nothing to back them up and The Fed stopping the morphine drip.
PEG around the world
Decided to tack on the PEG graph for The World. Some Japanese and Brazilian banks on Central Bank Stimulus. A drug company in the UK. China Life Insurance and Taiwan Semiconductors (for those iPhones?). Mostly a red heat map…
Even globally it looks like most stocks inflated in a bubble of non-value and The Banks posting unsupportable earnings on Free Money globally. Not the story I want to buy.