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Sunday, 02/07/2021 1:06:44 PM

Sunday, February 07, 2021 1:06:44 PM

Post# of 31824
The Motley Fool regarding the multiple:

"Expected earnings growth coupled with P/E-multiple growth can offer a powerful one-two punch. (Warning: numbers ahead!) Imagine a stock trading at $10 per share -- 10 times its EPS of $1. As earnings grow, the stock price will likely increase to maintain the multiple. For example, when earnings are $2 per share, the stock price should be near $20. But if the multiple is also growing, the price is likely to increase even more. If a reasonable multiple is perceived to be more like 15 and the earnings are $2 per share, the stock should eventually approach $30 per share. Companies generating above-average earnings growth and trading at below-average P/E ratios can make for great investments."
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