Question about Price to Earnings Ratio


I'm a noob so bear with me.

I once heard that a good practical use for Price to
Earnings is to consider it as an amount of money you need to invest inorder to get a dollar back on a stock. Does this really check out? In terms of an actual strategy then wouldn't it make sense to find a stock that has the lowest Forward P/E ratio possible while being above 0 inorder to capitalize on the upward potential in a stock?

Any insight is appreciated.


Comments

Leave a Reply

Your email address will not be published. Required fields are marked *