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We would be very appreciative if someone would give us some insight on how the Gardner's treat the PEG ratio in Rule Makers/Breakers. We didn't let the PEG keep us from buying the stock, but we would like gain some more insight on this ratio.

I'd be careful about applying the PEG to CREE. The PEG doesn't work with cyclicals like the semiconductor industry. In fact, if you read Peter Lynch, he mentions that cyclicals tend to work just the opposite of most companies: PEs (and hence PEG) tend to peak near the prime buying point and tend to dip near the prime selling point. If memory serves, TMF bought and sold both AMAT and KLAC at just about the ideally wrong times -- I suspect because they were looking too closely at the PEG and not understanding the industry.

I bought CREE at about 15 a few years ago. It's been all over the map (below and above that point) since. I like the technology, I believe we're only seeing the beginnings of the potential applications, and so I just ignore the gyrations.

As you study CREE going forward, I would suggest following AMAT as well as sort of a comparative base. AMAT will give you a better sense of the cycles, whereas CREE will probably behave more like a growth stock. And the PEG might actually work for that reason, -- it might be interesting to back test the PEG to CREE vs PEG on AMAT for a few years just to see.
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