How can a stock with a high PEG be recommended as a strong buy?

So I read about how the PEG ratio is the best guide to choosing the best stock for the money (http://beginnersinvest.about.com/od/financialratio/a/peg-ratio.htm.) Apparently a stock with low PEG is better value for money than one with high PEG.
Then why would a company like ORI with a PEG of 10 (while the rest of the market is 1.84) be recommended as a strong buy?

Aussiesteve said:

So I read about how the PEG ratio is the best guide to choosing the best stock for the money (http://beginnersinvest.about.com/od/financialratio/a/peg-ratio.htm.) Apparently a stock with low PEG is better value for money than one with high PEG.
Then why would a company like ORI with a PEG of 10 (while the rest of the market is 1.84) be recommended as a strong buy?

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Well, I don't know Orica [ORI] very well, but it could be that the company has very little growth or even negative growth factored into next year's forecasts... So you might be buying a company that people assume won't grow for the next year. However, they could be growing over a longer term - or, they could have a great balance sheet. (or any other number of reasons).

Remember, PEG ratio is simply the Price/Earnings ratio divided by assumed growth. Has many assumptions built into it, and does not consider all facts/possibilities.

Aussiesteve said:

... recommended as a strong buy?

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I am a cynic from way back!
I would suspect the ulterior motives of those recommending a strong buy.
The persons who want to sell, clearly have the strongest possible motives!
Also, those who wish to hold for a short time.
And also, those who wish to broker a transaction or two!!


Remember always, the broker is not your friend.

Do your research ... having found this clue you will need to dig even deeper!