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Thread: Base Counting Tutorial

  1. #1
    Join Date
    Dec 1969
    Location
    Tarzana, CA
    Posts
    962

    Base Counting Tutorial

    I have been asked if I could create an article on counting bases. I am attaching a powerpoint file on this subject. Because counting bases and setting price targets are interrelated the subject of calculating a 130% PE expansion price target is here also. I can answer questions on the base counting process if the powerpoint file is not self explanatory.
    Attached Files
    Mike Scott
    Cloverdale, CA

  2. #2
    Join Date
    Dec 1969
    Location
    Virginia, USA
    Posts
    16

    Thank you Mike

    for sharing this excellent and very comprehensive gem of a tutorial! For P/E determination on the original first stage base breakout, do you just annotate at initial breakout or is there a better method to derive P/E based on EPS ? Interesting that you noted GMCR still have not exhausted its upside potential. It's definitely one of the leading issue that's holding tough today.

    Thanks!
    Ken

  3. #3
    Join Date
    Dec 1969
    Location
    Tarzana, CA
    Posts
    962
    I either annotate PE at the time of the first base breakout or look at the historical 4 quarters of EPS prior to the breakout and calculate PE. What works well however and fairly quickly is to archive electronic versions of IBD. I can open up the day of the breakout and just look up PE in the tables. I have eIBD going back 8+ years to January 2003.
    Mike Scott
    Cloverdale, CA

  4. #4
    Join Date
    Jan 1970
    Location
    Las Vegas, NV
    Posts
    172
    Mike,

    Thanks for the tutorial. There is a lot of useful information here to learn. One question - does the P/E expansion model similarly apply to cyclical and/or commodity stocks? I remember when US Steel, X, traded with a 7 p/e or so and close to $200 back in 08 (wow, that seems crazy now!). Thanks for all the lessons.

    Best,
    Eric

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