Below are the estimated price changes for the components of the Dow Jones Industrial Average in the coming year. The price estimates are based on the current analyst low expectation of annual earnings assuming the stock retains the p/e ratio at the end of 2014.
Our experience has been that stocks that are expected to underperform generally do much better than those stocks that are expected to increase in the coming year.
As a test, we’re comparing the performance of the “end of 2014 p/e ratio” against the performance of the stocks if they all had a p/e ratio of 15 as depicted below.
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