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What Is The Correct PE Multiple?

|Includes: Apple Inc. (AAPL), GOOG, KO, MCD

As a full time investor in microcap stocks, the question: "What multiple should company XYZ trade at? " is a common one. Easy answers are hard to come by especially when well followed largecaps often trade at illogical valuations. In our member's section at MicroCapClub, Ryan Parker recently illustrated this by analyzing Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), Coca-Cola (NYSE:KO), and McDonald's (NYSE:MCD). It really is mind-boggling how high-growth companies like Apple and Google sitting on mountains of cash can trade at lower PE multiples then slower growing companies like Coca-Cola and McDonalds.

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