Peter Lynch: One up on Wall Street, look for Growth Stocks – ClariStock

ClariStock applied investment principles of Peter Lynch, focusing on growth stocks from his book “One up on Wall Street“.

Growth Estimate

Future growth estimate of a stock is provided. Higher revenue, EPS growth, and ROE are preferred.

Estimated P/E will also be provided. As wrote in “One up on Wall Street”, you should also compare its earnings growth to its P/E.

Commonly, the stock may be undervalued when estimated earnings growth exceeds the estimated P/E. The stock may be expensive when estimated earnings growth is lower than estimated P/E. You should also consider its moat when value a stock.

For example, a stock has estimated 2018 P/E of 25 times, however, the stock is estimated to deliver EPS growth of 30% in 2018, this stock may not be treated as expensive.

Amazon (AMZN), Nvidia (NVDA) and Alibaba (BABA) are very excellent examples to illustrate this relationship, P/E of them are always “expensive”, but when you compare them to their estimated EPS growth respectively, they do not seem expensive.