The tips are right in one sense but there are lots of caveats which render these tips dangerous for a starter. Ill list down just a few of these
Low P/E strategy 1. One must be extremely careful of the industry context while using this staretgy. For example steel is a cyclical industry, at the peak of the cycle, the P/E multiples would be extremely low and you might think its a good pick, but it might not be true. Hence Low P/E does not always work, especially in cyclical Industries. 2. The P/E based on just finished Fiscal year is incorrect, because the market will value future and not past. example if a company has had a bad year due to some one time expense its P/E will be very high. This does not mean its not a good stock. The market will calculate P/E based on expected EPS and then judge if its worth valuing.
On Growth 1. The underlying factor for buying a stock is weather it is going to create "Value" or not. There are three drivers for it; Profitability, growth and cost of capital.if a companies profitability is lower than its cost of capital it is destroying value. And if it grows it destroys faster. learning: Growth is good only with profitablity
