Small Cap Tech Stock PEG Leader: Tucows
January 15, 2010 (FinancialWire) — Tucows, Inc. (AMEX: TCX) was recently noted as one of the top five NYSE and NASDAQ small-cap stocks, based on price/earnings to growth ratio statistics, according to Monica Gerson at Benziga.com.
The company currently has a market capitalization of approximately US$ 46.3 million. TCX shares last closed at US$ 0.68 and reached its current 52-week high of US$ 0.72 on January 16, 2010.
Tucows, Inc., together with its subsidiaries, provides Internet services worldwide. It offers reseller services, including domain services, email services, personal names service, SSL service, platypus ISP billing solutions and blogware, and website builder publishing services. The company also provides retail services that include domain registration, email, and other Internet services. In addition, it offers a domain portfolio, consisting of various classes of domain names, such as gems, premium names, direct navigation names, and surname as part of its pay per click program; and provides content services. Further, the company offers digital certificates, billing, provisioning and customer care software solutions, blogware, and website building tools. It offers its services through resellers and Internet-based distribution network of Internet service providers, Web hosting companies, and other providers of Internet services, as well as through retail websites. The company was formerly known as Infonautics, Inc. and changed its name to Tucows Inc. in August 2001. Tucows was founded in 1992 and is based in Toronto, Canada.
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Wall Street for Main Street: PEG ratio (Price/Earnings to Growth ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share (EPS), and the company’s expected growth.
In general, the P/E ratio is higher for a company with a higher growth rate. Thus using just the P/E ratio would make high-growth companies overvalued relative to others. It is assumed that by dividing the P/E ratio by the earnings growth rate, the resulting ratio is better for comparing companies (with different growth rates).
The PEG ratio is considered to be a convenient approximation. It was popularized by Peter Lynch, who wrote in “One Up On Wall Street” that “The P/E ratio of any company that’s fairly priced will equal its growth rate”. In other words, a fairly valued company will have its PEG equal to 1.
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