Implied Growth Rate formula help

Water Cooler Investing
#1

Hi Guys, I was reading this book “Fire Your Stock Analyst…” (which is ironic, because I hope to be one myself someday), but anyways, I was wondering how one can use the implied growth formula for negative PE stocks. Is there any way to use this formula or should I just go about using other valuation methods?

Just for your information, the formula mentioned is a derivation from Ben Graham’s Intrinsic Value formula:

Implied Growth Rate = [P/e * (AAA/8.8)] - 4.5

Where: AAA is the corporate bond yield.

(but I’m sure y’all already know this formula anyways)

Thanks Guys.

#2

I don’t think you should use that forumla. Anything by Ben Graham should be pretty much outdated by now. Except for his investing philosophies.