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Being a new member of the Hidden Gems community, I have been trying to learn about stock price valuations. I have read and reread Tom Gardener`s article in the Sept. 04 HG newsletter and have been using and studying the Automatic HG Thumbnail stock evaluator generously given to us on the HG boards by tedyun.
I found the three Motley Fool articles about the mythical dollar machine to be very helpful, but I still am confused about how to determine if the current price of a stock is a fair value compared to the dollar stream that the stock is expected to generate in the future.
How is the expected future price of the stock discounted back to today`s fair value using expected earning`s growth rates? How does the PE multiple figure into this?
I realize this may involve a lengthy and complicated answer, so is there a place where I can go to read further and more fully understand these issues?
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