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“Remember that E, the earnings, multiplied by M, the multiple, equals P, the price. That’s the price-to-earnings multiple. If a stock’s PE multiple is equal to or less than its growth rate, then that’s a cheap stock, Cramer said.



A stock with a PE that’s twice the growth rate follows the opposite logic: Ten percent growth on a 20 multiple stock probably means it is time to take profits.” source...