When IA¢A_ATve made decisions previously on what stocks I want to invest in (key word there), IA¢A_ATve mainly looked at the balance sheet and the dividend payouts (because I'm interested in stocks that pay 3+% divs and also have scope for growth). Future plans and gut also assist me, and so far so good, all things considered. When looking at developing my portfolio further, IA¢A_ATm looking at which sectors I have little/zero exposure to currently, and trying to evaluate companies in said sectors (e.g. mobile telecoms). When differentiating between 2 companies, I will check out the research reports, sens etc. but I would also like to ensure I understand and can consider the PE ratio if I want to. I apologise in advance if the below is retarded, but IA¢A_ATm not certain my understanding from reading is being interpreted correctly by my brain (it probably isnA¢A_ATt) so any clarity, insight, additional info greatly appreciated here. So lets say for example I am comparing Vodacom and Altech in the mobile telecoms space. Without taking anything into consideration (for argument sake) I see the following: VODACOM - PE 12 ALTECH - PE 10 To keep it simple IA¢A_ATll assume the two are similarly prices at R100 For a P/E of 12 for VOD: 100/8.3 = 12 For a P/E of 10 for Altech: 100/10 = 10. This would imply then that over the last year, earnings on ALT shares were higher than earning on VOD shares relative to the cost of the share. Thus at first glance, a lower PE appears better? But for me, there is no way I would consider Altech over Vodacom at the moment, if I were considering them (I am actually considering VOD though). Anyway, for longer term investing, IA¢A_ATm not sure the PE even matters? Also the earnings in this equation is earning of the company and not earning of the stock?
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