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Up, up and away

Some companies have only seen their valuations getting stretched. Does it mean they will keep going on like that?

Up, up and away

The price-to-earnings (P/E) ratio has always been the most common method to look for undervalued stocks. In this method, the price of a stock is divided by the company's earnings per share. The resultant shows the price paid for each rupee of the company's earnings. If the P/E ratio is low, the stock is perceived to be undervalued. But the P/E ratio is a simplistic method to assess valuation


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