re: "Thought I'd throw that out..eat me alive if you want."
lol- that's usually not my style. Anyway, I enjoy this type of discussion and learn from it as well.
I agree again that having more concrete information to go on for a longer period (than the 6 months or so NFEC management has revlealed) would help in a PEG- but it's not there. It's not going to be there in almost any small cap, Chinese or US- based, at least not with much accuracy or a high degree of confidence. In fact, to attempt to put earnings growth out beyond 3 years is a crap shoot even for larger cap stocks.
Given the sector NFEC is in, plus their recent expansion into the wind power market (they expanded their production capacity in q4 of 2009 to met demand according to this powerpoint, pages 5 and 24) I think that level of growth can be sustained for at least 2010 with some confidence.
This will be in addition to growth shown this year, and in addition to the multiple contracts anounced in the last 2 months that eclipsed 9 months of 2009 revenues.
You said- "based on past growth rates you can estimate reasonable growth expectations for the future.."
I see two problems with that premise:
1. Relying too heavily on past growth rates to predict the future is contradictory to a PEG ratio. Past growth is frequently not equal to future growth- especially in an economy that has the underlying dynamics of China, and (specifically related to NFEC) in a sector that is extremely hot with government support- energy conservation.
2. I understand that this deviates from what the textbooks say on preferred time horizon for a PEG ratio, but in my view, having a shorter horizon of 6-12 months where information is more reliable to estimate earnings growth rate for the next year is preferable than having a longer horizon of 3-5 years. Hell, the CEO's and CFO's can't predict with much accuracy their forward growth that far- how can I, or anyone for that matter, without adding in a big dose of guesswork, or relying too heavily on past results.
The farther out you go, the less confidence you should have in the number you arrive at, so maybe that practice of looking at a PEG from a 3-5 year horizon should be thought of as less accurate than a PEG that is based on a shorter term horizon of 6-12 months when more concrete information is available, and then adjusting them up or down on a quarterly basis- just as a PE is done, when more concrete information is available.
Radical as it may be to some who rely on textbooks, (not implying that's you), that's how I do it.
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