The price of a stock is often expressed relative to a base such as earnings. The resulting ratio is then used to value stock. Go to a website that provides information such as the price-to-earnings ratio, price-to-sales ratio, price-to-book ratio, the PEG ratio, dividends, estimated growth rate, profit margin, and return on equity. Compare several firms within the same industry, such as telecommunications (AT&T, Verizon), food products (Del Monte. Heinz, Kellogg) or retailers (Wal-Mart, Target, Best Buy). Compare the firms’ valuation and performance ratios. Which stock appears to be the option to buy? In other words, which option would you recommend to a client? You may have to consult more than one website.
