Letter to Editor

I thoroughly enjoyed your latest issue on stocks to avoid and partial profit booking. You mentioned that investors focus on quality mid-cap and small-cap stocks using the PEG ratio. Can you elucidate on that?
- Kunal M 

Editor Responds: We are pleased to hear that you found our cover story in the recent issue insightful and appreciate your query. The price/earningsto- growth ratio (PEG ratio) is a stock’s price-to-earnings (P/E) ratio divided by the growth rate of its earnings over a particular time period. The PEG ratio simply improves on the P/E ratio by factoring in expected future earnings growth into the calculation. PEG ratio is often considered to be an indicator of a stock’s true value. Similar to P/E ratio, a lower PEG ratio indicates that a stock is undervalued. Hope this helps. Happy investing!