rate (PEG >2) and the current valuation is in the highest band of last five years average, then the stock is overvalued. It is always better to avoid such stocks. You can get a better result if you replace profit growth rate with EPS (Earning per share) growth as it is the Earning per share that matters the most. Moreover, profit growth doesn’t always ensure EPS growth. After equity dilution, profit growth rate and EPS growth rate varies. To judge any cyclical business, you can alter the consideration period. Instead of 3 years or 5 years average value, you can consider any
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