HOW TO USE P/E RATIO TO BUY STOCKS
TSLA has a 360 P/E ratio, this would mean it takes 360 years to double your money if the company stopped growing it's business right now! This is a premium on top of the share price that investors are willing to pay to get a piece of Elon's company. On the other hand Bank of America sits at 15 P/E ratio and would take 15 years to double. Lower P/E are usually safer bets because they don't rely on future promises.
Rule of thumb: A good P/E ratio is one that is lower than its historical average and peers without a decline in business quality.
The P/E ratio measures valuation, not quality. A great company can have a high P/E, while a struggling company can have a low P/E.
