Wade - high p/es
I have often heard it said that the leaders in a sector will command a P/E that is twice the industry average.
What does it take to be one of the industry leaders? From what I have seen, it takes an impecable track record of ever increasing revenue and earnings and a financial outlook for the same. On top of that the investing community (at least those that invest in the sector your company operates in) must have been following you for a number of quarters. No stumbles along the way. The company has to be one of the analysts darlings because of it's consistent and predictable results.
I think companies end up with high P/Es because of this consistent growth record, immpecable balance sheet, great relationshiup with the analysts, and large following in the investor community. The feeling that they can do no wrong.
The investing community often calls this "priced for perfection".
JFF7
It's better to be out wishing you were in than in wishing you were out.
"Markets can remain irrational longer than you can remain solvent". - John Maynard Keynes
