Stock Market • 699 • 1
The Dalal Street experts like stocks with low PE.
A low PE indicates undervaluation. But what role does undervaluation play in your portfolio? These stock options may result in higher returns. Check the fundamentals of the P/E ratio here.
However, choosing stocks only based on low PE is not advised. Due to the possibility that a stock's low PE indicates weak fundamentals. Therefore, before making an investment in Low PE equities, it is crucial to confirm their fundamentals.
But what's wrong with PSUs in same formula–
PSUs generally trade at single-digit PE ratios but lack sufficient demand. However, the cause is different. There is no denying the usefulness of the PE ratio for rapid valuation. The PE ratio, however, cannot be used as the only measure for appraisal. Experts employ the idea of intrinsic valuation as a result.
The market typically overvalues good stocks. The PE ratio can be used to determine if a stock is roughly overvalued or undervalued. Utilizing metrics such as intrinsic value and PE ratio is one of the simpler ways to evaluate the worth of companies.
Some low PE stocks are as follows—
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