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Author: stone9 Two stars, 250 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127  
Subject: Re: Knot stock Date: 5/9/2007 12:50 PM
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I agree, just look at Ctrip (CTRP) and Intuitive Surgical (ISRG). Both have high PEs but have performed well. Be forewarned though, that stocks with high PE's tend to get nailed at earnings times if they miss earnings or give not so bright forecasts. Which is why they shouldn't give forecasts!

I don't think a PE of 29 is so bad for a stock like this. You could even call it cheap, considering it's growth rate. If you take Jim Cramer's advice, he's willing to pay up to 2X the growth rate for a company... after that, it's too expensive.

So if ACME's earnings are expanding at 20% a year, then he is willing to pay a price that is at or below a PE of 40... He came up with this because that's what he believes hedge fund managers and mutual fund managers involved in the growth game are willing to pay. Use at your own risk! There are days I like Cramer, then there are days I think he's completely lost it. I personally hate it when he bad mouths www.Fool.com, that's just not acceptable.

- Stone9
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