Monthly Archives: February 2010

Screen Of The Week: Peg Ratio

finance

This week, I’m going to focus on a simple strategy that uses the PEG Ratio for determining a company’s undervaluation or overvaluation. Let’s first start with a definition. A PEG ratio is simply the: P/E Ratio divided by the Growth Rate.

A value of 1 or less is considered good (at par or undervalued), while a value of greater than 1, in general, is not as good (overvalued). Once again, the PEG Ratio is simply the P/E Ratio divided by the Growth Rate. Many believe this ratio tells a more complete story than just the P/E.

A company with a P/E Ratio of 25 and a Growth Rate of 20 would have a PEG Ratio of 1.25 (25 / 20 = 1.25). While a company with a P/E Ratio of 40 and a Growth Rate of 50 would have a PEG Ratio of 0.8.

Traditionally, investors would look at the stock with the lower P/E Ratio and deem it a bargain (undervalued). But looking at it closer, you can see it doesn’t have the growth rate to justify its P/E.

The stock with the P/E of 40, though, is actually the better bargain since its PEG Ratio is lower (0.8), implying it’s undervalued with more potential value. (Undervalued in relation to its projected growth rate.) . In other words, the lower the PEG, the better the value because the investor would be paying less for each unit of earnings growth.

So for this week’s screen, we’re going to use the PEG ratio to find value.

Tips For First Time Plano Home Buyers

finance

Buying a Plano home can be long, often frightening and complicated and it is important to be prepared for the process. Knowledge gives you power when it is time to negotiate a home price and a mortgage. For the first time home buyer, there are many factors to consider before you write an offer to buy. The more information you have before you start looking for a home the better off you will be.

Look Beyond the List Price

When securing a mortgage for your first home, it is important to look at the true cost of the mortgage, not just the interest rate. Study all of the paperwork, including the fine print, carefully, especially if the interest rate is below other advertised mortgage rates. Upon closer inspection you may find out that the great interest rate you were quoted is guaranteed for only a short period of time or that it contains a pre-payment penalty. Your mortgage may be the most important contract you will ever sign, and it is essential that you understand the terms and conditions before you sign on the dotted line. In most cases it’s a good idea to hire a real estate attorney to review the mortgage documents for you. Many communities provide a first time homebuyer program designed to help renters become homeowners. These organizations may be able to provide the legal guidance you need at a price you can afford.

Every Plano Real Estate Transaction is Unique

Every homebuyer will have a different set of circumstances, and it is important to relay that information to the mortgage company upfront. Some homeowners may plan to move in for a short term like a year or two, and in this case they may be able to benefit from a variable rate mortgage. Other home buyers will plan to remain in their home for decades. These home buyers may benefit from a fixed rate mortgage and that is that has predictable and stable monthly payment.

It is very important for the first time home buyer to factor in all the cost of their mortgage when determining how much they can afford to pay for their first Plano home. Things like closing costs and the high price of mortgage insurance can drive up costs and take away from the funds that would otherwise go towards the home towards home improvements, furnishings and other home essentials. In many cases sellers may be willing to pay some of the closing costs for the buyer and some mortgage companies will be able to negotiate those closing costs lower. The key to an advantageous real estate transaction is to ask those questions well before closing, and be prepared to search for a better deal if necessary.

Anytime a first time buyers enters a Plano real estate transaction they should retain the services of an experienced Plano Realtor. Their Realtor can be on the lookout for any hidden cost and fees fees. These nuisance fees can add up to hundreds, even thousands, of dollars on closing day. Be sure to study your paperwork to find any such fees. If you are unsure about the legitimacy of any charges, ask your Realtor or the closing agent for a thorough explanation. Again, an experienced Realtor can provide valuable insight into which fees are reasonable and which are junk fees. Your Realtor can use the comprehensive Plano MLS system to find sellers who may be willing to cover some of the first time buyers closing cost. Of course any defects in the home should be pointed out to the seller well before the closing date. The costs of necessary repair should be negotiated prior to ratifying the purchase contract. A home is a major investment and it is important to make sure that everything is as agreed to before going to closing and moving in.

Cautiousness In Investing

finance

In the financial market, it is share market news that finds place in television, newspaper, on ticker tapes, the Internet, and more mediums. The latest share prices displayed in charts as well as the stock table, encapsulating the market’s performance for the day, may seem tough for the beginner to understand. The numbers may seem like mere numbers for him and he may be ignorant of the value attached to the same. The past data displayed for comparative analysis may not seem significant for him at all. Investing with little or no knowledge about the most active shares may prove disastrous for the investor. If he is fortunate enough, he may gain otherwise losses incurred may take a toll on his life, especially if it is a big investment. And such blunders do happen. Well, the share market is not a gamble; it requires careful speculation on the part of the investor to reap profits.

As an investor, when you view the latest share prices, it is vital to know the performance of the particular shares over time. Once you know the performance for a set time period, you can analyze the trends. For example, look at the lowest price of the share as well as the highest price over a certain time period. Also, take into account the level of income or profits that you desire. And watching news for updating yourself with the current market conditions can add to your abilities to speculate well. If you are searching for detailed market news, visit an online financial news portal. You can also visit online brokerage platforms that carry latest data on active shares, share prices, and any stock information you wish to view. Knowledge has no peripheries. The more you learn and gain, you feel there is yet lot more to explore and learn. The intensity of the knowledge gained as well as expertise over time matters.

The Internet has transformed the very concept of trading. You can have access to the latest share market news, get company information, view the most active shares, collect significant data, and lots more with a click of a button. Cautiousness and patience pays one in the long run in the share market. No doubt losses are inevitable but with a cautious approach, you can minimize risks involved. Enough research and strategizing are the buzzwords that are the pillars for the wise investor.