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SmartMoney Magazine by Jack Hough (Author Archive)
An Alternative to Wall Street's Stock-Price Targets
SWEETBREADS AREN'T PASTRIES. I learned that one bite too late at a French restaurant years back. Turns out it's a dish made from the thymus gland of a juvenile cow or sheep. I tell you that to set the tone for a truly unappetizing recipe I'm about to share. It's how Wall Street cooks up its price targets. You know: Shares of Next Big Thing, now $35, are forecast to hit $50 within a year, and hence we rate it as a "buy." That sort of thing.
I have two motivations. I want you to avoid the financial equivalent of my unsavory surprise by ignoring price targets altogether. Also, I want to introduce a new idea on stock picking that uses Wall Street's price-target math, only backward, to show which companies seem most likely to live up to investor expectations.
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