June 18, 2024

WHILE BOTH METRICS INCORPORATE THE SAME EARNINGS GROWTH RATE "g"?

ANSWER BY ChatGPT BASED ON ARTIFICIAL INTELLIGENCE (A.I.)

June 15, 2024

THE CASE OF THE "MAGNIFICENT SEVEN" + NETFLIX + SMCI

Our unique approach is based on the Potential Payback Period (PPP), a synthetic and dynamic metric that
combines the P/E ratio, the expected earnings growth rate, and a long-term interest rate to discount future
earnings to their present values.

By using a regression line showing an inverse correlation between the PPP and the stock Beta, our approach
also integrates a risk factor.

All the figures used in this presentation are sourced from Yahoo
Finance and Investing.com. Our conclusions
are drawn only by making the figures consistent.

As of June 14, 2024, among the nine companies, the most attractive stock in terms of PPP is NVIDIA (10.22),
followed by META (10.29) and SMCI (10.43).

Any comparison on the basis of the traditional P/E ratio would be meaningless.

Data as of June 14, 2024

Data as of June 14, 2024

Rainsy Sam

June 11, 2024

AND PERFORMANCES SINCE JANUARY 1, 2024

- TAIWAN (TAIEX) : 21 840.29 (+ 21.89 %)

- JAPAN (NIKKEI 225) : 39 134.79 (+ 16.95
%)

- USA (S&P 500) : 5 360.79 (+ 12.39 %)

- GERMANY (DAX) : 18 360.11 (+ 9.60 %)

- UNITED KINGDOM (FTSE 250) : 20 369.65 (+ 3.45
%)

- FRANCE (CAC 40) : 7 799.26 (+ 3.39 %)

Why have the stock markets of Japan and Taiwan outperformed other stock markets since the beginning of this
year?

I have identified the reasons -- at least the main ones -- for this development in the table below that I
posted on LinkedIn on December 31, 2023. In this table (see following page), the main stock markets were
evaluated based on the Potential Payback Period (PPP). This new metric for stock evaluation is an adjustment
of the P/E ratio according to two fundamental variables that are very different from one country to another
and are not taken into account in the traditional P/E ratio, namely the earnings growth rate and the
interest rate.

According to ChatGPT, which is based on artificial intelligence (AI), the PPP is a "sophisticated tool that
refines the traditional P/E ratio" and "can be seen as an improvement over the P/E ratio."

Rainsy Sam

June 08, 2024

DEVELOPED BY RAINSY SAM AS A NEW METRIC FOR STOCK EVALUATION

"The Potential Payback Period (PPP) is a concept for stock evaluation developed by Rainsy Sam. [It] is a
sophisticated tool that refines the traditional Price/Earnings (P/E) ratio by incorporating projected
earnings growth and adjusting for interest rates. It can be particularly useful in environments where the
P/E ratio might be misleading due to high growth rates or varying interest rates."

"The Potential Payback Period (PPP) can be seen as an improvement over the P/E ratio, particularly for
long-term investors interested in a more comprehensive and forward-looking assessment of a company’s value.
By incorporating growth projections, PPP addresses some limitations of the P/E ratio, such as sensitivity to
short-term earnings fluctuations and lack of consideration for future potential."

For those interested in delving deeper into the details, the full insights on the PPP from ChatGPT can be
accessed at https://www.stockinternalrateofreturn.com/AI_and_PPP.html

June 06, 2024

COULD YOU EXPLAIN THE CONCEPT OF POTENTIAL PAYBACK PERIOD (PPP)

AS ELABORATED BY RAINSY SAM FOR STOCK EVALUATION?

Please go to Rainsy Sam’s Website https://www.stockinternalrateofreturn.com/

June 02, 2024

ChatGPT explains how the Potential Payback Period (PPP) represents an improvement over the Price-Earnings (PE) Ratio.

April 19, 2024

THE P/E RATIO, THE PRICE/EARNINGS-TO-GROWTH (PEG) RATIO,

AND THE POTENTIAL PAYBACK PERIOD (PPP) OR “DYNAMIC P/E RATIO”

Data as of April 17, 2024

Fundamental data (especially P/E Ratios and Earnings growth rates) are from Yahoo Finance exclusively, so as
to check their consistency. https://finance.yahoo.com/

“r” = Interest rate used as discount rate = 4.585 % (Yield on the US 10-year Treasury note)

EPS = Earnings per share (Trailing Twelve Months)

P/E Ratio = Price/Earnings Ratio = PER

“g” = Earnings growth rate estimate (“Next 5 Years per annum”)

PEG = Price/Earnings-to-Growth Ratio

PPP = Potential Payback Period or “Dynamic P/E Ratio”
Instant calculations at https://www.stockinternalrateofreturn.com/instant_calculations.html

Conflicting conclusions based on the three different metrics (PER, PEG and PPP): Figures indicating relative
overvaluation are in red, undervaluation in
green, and fair valuation in
brown. The PPP proves to be most
relevant in light of the 1-Year Change in stock prices.

Rainsy Sam

April 17, 2024

As written in my latest post on LINKEDIN “Elaborating a Dynamic P/E Ratio” (April 11, 2024)
https://www.linkedin.com/feed/update/urn:li:activity:7184191806899671040/

“The stock market is highly sensitive to any change in the expected earnings growth rate. It is not the
growth rate itself or the speed (concept of "first derivative" in physics) that matters most, but its
acceleration or deceleration (concept of "second derivative")”.

From this perspective, the "good" is still ahead of us, but the "better" is
already behind us.

The Potential Payback Period (PPP), which is a kind of “Dynamic P/E Ratio”, is very sensitive to the
earnings growth rate "g" in the formula

The latest figures for “g” indicate that the New York Stock Market as
valued with the PPP, is getting relatively more and more expensive and that the end of the Bull Market
is in view.

Rainsy Sam

April 05, 2024

THE CASES OF MICRO TECHNOLOGY (MU) AND NVIDIA (NVDA)

In the semiconductor and artificial intelligence sectors, how can we compare a temporarily loss-making
company such as Micron Technology (MU) with one of the “Magnificent Seven” such as Nvidia (NVDA)?

Investors often find themselves needing to evaluate companies for which the traditional P/E ratio cannot be
meaningfully calculated, at least temporarily, when losses are incurred or earnings are near zero. This is
particularly true for startups or companies in a turnaround situation, or those undergoing restructuring.

This is where the concept of "Potential Payback Period" (PPP) proves useful.

The PPP is defined as the period of time necessary for the sum of future earnings per share to equalize the
current share price. Future earnings are discounted to their present values to reflect inflation or
opportunity cost.

Unlike the traditional P/E ratio, which measures the value or "expensiveness" of the stock based on the
earnings of a single year, the PPP does so on the basis of earnings generated over a much longer period of
time, in fact over as many years as it takes to equalize those future earnings with the current share price.

Initially, the two concepts are quite similar. For example, a P/E ratio of 10 means it takes 10 years of
earnings per share to equalize or “potentially recover" the current stock price. However, this assumes no
earnings growth and no inflation over the years. In this case, P/E ratio = PPP, meaning the P/E ratio is the
PPP applied to a static world where there is no growth and no inflation, and it is also expressed in years,
like any "period."

For more realistic cases, the PPP adjusts the P/E ratio by introducing an earnings growth rate and an
interest rate used to discount future profits. This discount rate reflects inflation, but also an
opportunity cost, as the investor buying a stock forgoes the return offered by a less risky long-term bond.

Finally, the PPP appears as a generalization of the P/E ratio with possibilities to take into account
various and varying earnings growth rates and interest rates. Professor Emeritus of Finance at ESSEC (a top
French business school) Patrice Poncet considers the PPP to be a "nice generalization of the P/E ratio" and
that it represents an “undeniable improvement” in financial analysis.

If the P/E ratio is a snapshot based on earnings for a single year, the PPP is a video that captures the
evolution of these earnings in real terms over a more extended period, defined as the time required
("period") for the discounted future earnings flow to equal the current stock price. For this reason the PPP
can also be called “Dynamic P/E Ratio”.

The PPP is, in fact, a metric of a company’s profit-making capacity (or earnings potential), knowing that it
is this anticipated profit-making capacity over the medium and long term
that basically determines the share’s value in the stock market.

The advantages of the PPP are presented in detail at https://www.stockinternalrateofreturn.com/Advantages-of-ppp-irr.html

To calculate the PPP for Micron Technology and Nvidia we use the following formula:

Mathematical demonstrations at https://www.stockinternalrateofreturn.com/Mathematics.html

Share price and interest rate as of April 4, 2024 (Interest rate r = 4.308%).

Instant calculations of the PPP with all possible simulations can be performed at
https://www.stockinternalrateofreturn.com/instant_calculations.html

In conclusion, Micron Technology currently presents a PPP (or profit-making capacity) similar to that of
Nvidia (around 11.40 years of future earnings to potentially recover the current share prices), but the
former stock is riskier than the latter, with more earnings volatility in the past and less visibility in
the future.

Rainsy Sam

April 02, 2024

Micron Technology, Inc. designs, develops, manufactures, and sells memory and storage products worldwide.

On December 25, 2023 we posted the following analysis :

https://www.linkedin.com/feed/update/urn:li:activity:7144960074296279040/

From December 21, 2023 to April 1, 2024, Micron Technology increased from $85.48 to $124.29 (+45.40%) while
Intel Corp. decreased from $47.08 to $44.47 (– 5.54%).

You can perform instant calculations of the PPP with all possible simulations at
https://www.stockinternalrateofreturn.com/instant_calculations.html

While the P/E Ratio is still not applicable in the case of the two temporarily loss-making companies, Intel
Corporation and Micron Technology, the latter is still relatively attractive in the semiconductor /
Artificial Intelligence industry, with a PPP of only 10.86.

If you want any stocks you hold to be freely evaluated on the basis of the PPP, just send us their names.
You will quickly receive the corresponding analyses with relevant comparisons.

March 31, 2024

IN TERMS OF POTENTIAL PAYBACK PERIOD (PPP)

ACM RESEARCH (ACMR, SEMICONDUCTOR INDUSTRY, NASDAQ)

ACM Research, Inc., together with its subsidiaries, develops, manufactures, and sells single-wafer wet
cleaning equipment for enhancing the manufacturing process and yield for integrated chips worldwide.

https://finance.yahoo.com/quote/ACMR?.tsrc=fin-srch

Data as of March 28, 2024

Price and Earnings per share (EPS) in US$

The Potential Payback Period (PPP) is a mathematical adjustment of the Price Earnings (PE) Ratio according to the earnings growth rate and the interest rate.

Instant calculations of the PPP with all possible simulations at
https://www.stockinternalrateofreturn.com/instant_calculations.html

The PPP is a synthetic metric because it combines three variables that are essential in stock evaluation,
namely the PE ratio, the expected earnings growth rate, and the prevailing interest rate. It’s also a
dynamic metric because, contrary to the static PE Ratio, it incorporates the earnings of several years to
come through an estimated earnings growth rate.

If you want any stocks you hold to be freely evaluated on the basis of the PPP, just send us their names.
You will quickly receive the corresponding analyses with relevant comparisons.

March 28, 2024

IN TERMS OF POTENTIAL PAYBACK PERIOD (PPP)

TRAVELZOO (TZOO, NASDAQ)

Travelzoo, together with its subsidiaries, operates as an Internet media
company that engages in the
provision of travel, entertainment, and local deals from travel and entertainment companies, and local
businesses worldwide.

https://www.investing.com/equities/travelzoo

Data as of March 27, 2024

Price and Earnings per share (EPS) in US$

The Potential Payback Period (PPP) is a mathematical adjustment of the Price Earnings (PE) Ratio according to the earnings growth rate and the interest rate.

The average PPP of the companies included in the S&P 500 amounts to
13.59.

Instant calculations of the PPP with all possible simulations at
https://www.stockinternalrateofreturn.com/instant_calculations.html

If you want any stocks you hold to be freely evaluated on the basis of the PPP, just send us their names.
You will quickly receive the corresponding analyses with relevant comparisons.

March 24, 2024

1- PE RATIO: 28.41

Mean: 16.06

Median: 15.00

Min: 5.31 (Dec 1917)

Max: 123.73 (May 2009)

Source: https://www.multpl.com/s-p-500-pe-ratio

2- EARNINGS YIELD: 3.52% (compared to Yield on US 10Y Treasury Note:
4.199%)

Mean: 7.25%

Median: 6.67%

Min: 0.81% (May 2009)

Max: 18.82% (Dec 1917)

Source: https://www.multpl.com/s-p-500-earnings-yield

3- PRICE-TO-EARNINGS GROWTH (PEG) RATIO: 1.51

PE = 28.41

Earnings growth rate: + 18.8%

28.41 / 18.8 = 1.51 > 1.0, indicating overvaluation.

Source for Earnings growth rate:
https://lipperalpha.refinitiv.com/2024/02/sp-500-long-term-eps-growth-forecasts-reach-multi-year-high/

4- SHILLER PE RATIO OR CYCLICALLY ADJUSTED PE (CAPE) RATIO:
35.0

Mean: 17.10

Median: 15.97

Min: 4.78 (Dec 1920)

Max: 44.19 (Dec 1999)

https://www.multpl.com/shiller-pe

The Shiller PE Ratio created by Yale University
Professor Robert Shiller – who received the Economics Nobel
Prize in 2013 – is approaching a level that indicates a
possible market crash. This metric is a variation of
the traditional PE ratio that uses the ten-year average of inflation-adjusted earnings instead of
single-year earnings. It helps assess whether the stock market – as represented by the S&P 500 – is
overvalued or undervalued. The higher the ratio, the more overvalued a market. Over more than 100 years, the
average and median Shiller P/E Ratio has been around 16 or 17, spiking up significantly higher often before
market crashes.

It reached an all-time high in December 1999 at 44.19. Based in part on that record high ratio,
Shiller correctly predicted the market crash that occurred at the beginning of year 2000.

At 35.00 the Shiller P/E Ratio is alarmingly high. “(But)
like many other metrics, (it) is backward-looking,
based on historical performance figures, leading some critics to question its utility as the economy and
countries’ economic policies (and companies’ financial prospects) evolve.”
https://www.forbes.com/advisor/investing/shiller-pe-ratio/

5- POTENTIAL PAYBACK PERIOD (PPP): 12.24

The Potential Payback Period (PPP) is a mathematical adjustment of the traditional Price Earnings (P/E)
Ratio to incorporate the earnings growth rate and the interest rate in the stock evaluation process.

As of March 22, 2024

- PER = 28.41

- g = + 18.8% (Source: As indicated for the calculation of the PEG Ratio at Point 3)

- r = 4.199% (Source: https://tradingeconomics.com/bonds)

- PPP = 12.24

Instant calculations at https://www.stockinternalrateofreturn.com/instant_calculations.html

Based on comparisons in time and space, a PPP of 12.24 is very
reasonable and leaves ample room for further
increase of the S&P 500 index. The forward-looking PPP – which is a kind of dynamic P/E Ratio –
is the
only
metric to take into account the improving earnings prospects for US companies. See upward revisions of
earnings growth rates at https://www.linkedin.com/feed/update/urn:li:activity:7169639808984678400/

Rainsy Sam

March 22, 2024

ON THE BASIS OF THE POTENTIAL PAYBACK PERIOD (PPP)

Data as of March 22, 2024

Price and EPS in Euros

g : Earnings growth rate per annum

r : Interest rate = 2.80%

The Potential Payback Period (PPP) is a mathematical adjustment of the Price Earnings (P/E) Ratio according to the earnings growth rate and the interest rate.

The average PPP for the French stock market currently exceeds 14.00.

Instant calculations at https://www.stockinternalrateofreturn.com/instant_calculations.html

If you want any stocks you hold to be freely evaluated on the basis of the PPP, just send us their names.
You will quickly receive the corresponding analyses with relevant comparisons.

March 21, 2024

ARE TWO ATTRACTIVE FRENCH COMPANIES

ON THE BASIS OF THE POTENTIAL PAYBACK PERIOD (PPP)

Data as of March 21, 2024

Price and EPS in Euros

The Potential Payback Period (PPP) is a mathematical adjustment of the Price Earnings (P/E) Ratio according to the earnings growth rate and the interest rate.

The average PPP for the French stock market currently exceeds 14.00.

Instant calculations at https://www.stockinternalrateofreturn.com/instant_calculations.html

If you want any stocks you hold to be freely evaluated on the basis of the PPP, just send us their names.
You will quickly receive the corresponding analyses with relevant comparisons.

March 19, 2024

THE CASE OF NVIDIA

The three possible metrics are

1) The traditional Price-to-Earnings Ratio (PER)

2) The Price-to-Earnings Growth (PEG) Ratio

3) The Potential Payback Period (PPP)

On April 25, 2023, the well-known investor Peter Lynch -- who popularized the PEG in the 1980s –

“expressed regret for not buying into NVIDIA,” probably because he found the
stock overvalued on the basis of the PEG.

On October 7, 2023, I made the following recommendation on NVIDIA :

On February 2, 2024, I further explained my opinion by comparing the “Magnificent Seven” stocks on the basis of their PPPs. NVIDIA appeared as the most attractive stock with the lowest PPP (10.04).

Evaluation of NVIDIA using the three metrics as of February 2, 2024.

The three metrics yield three different conclusions:

1) P/E Ratio = 86.94. The stock is markedly OVERVALUED.

2) PEG = 86.94 / 50 = 1.74 ( > 1). The stock is still OVERVALUED.

3) PPP = 10.04. The stock is UNDERVALUED.

In his book "One up on Wall Street" published in 1989, Peter Lynch wrote: "The P/E ratio of any company
that's fairly priced will equal its (earnings) growth rate", meaning a fairly valued company will have its
PEG equal to 1. If this metric shows a figure higher than 1, the company is considered “overvalued.”

The earnings growth rate must be closely followed and immediately rectified whenever applicable.

Rainsy Sam

March 13, 2024

- Last week, on March 6, 2024, I posted "NVIDIA and SMCI are the two best artificial intelligence stocks"
and I urged investors to use "The Potential Payback Period (PPP): A unique tool for stock selection."
https://www.linkedin.com/feed/update/urn:li:activity:7171291486553104384/

- On February 17, 2024, using the PPP approach, I pointed to the main "US stocks that will most benefit from
the AI revolution".

https://www.linkedin.com/feed/update/urn:li:activity:7164769504101658624/

- On February 11, 2024, I posted " (Based on the PPP) SMCI is the second most attractive AI stock".
https://www.linkedin.com/feed/update/urn:li:activity:7162484219326222336/

- On February 7, 2024, I posted "Another earnings simulation leads to new price target for NVIDIA : $1,200."
Without any downward revisions in earnings estimates, investors should wait for this price target to be
reached this year.
https://www.linkedin.com/feed/update/urn:li:activity:7160979050881052673/

- On October 7, 2023, I posted " NVIDIA: A strong buy on the basis of the PPP. Among the US major
high-growth stocks NVIDIA is the most attractive in terms of PPP, even though with the highest P/E ratio”.
NVIDIA share price was then $457.62. A 100% increase since.
https://www.linkedin.com/feed/update/urn:li:activity:7116790087434035200/

See all my recent articles at https://www.stockinternalrateofreturn.com/latest_articles.html

Rainsy Sam

March 13, 2024

The company stock is the “most expensive” and, at the same time, the “cheapest” in the world. The “most
expensive” in that its P/E ratio is equal to infinity (with the company currently achieving 0 profit), the
“cheapest” in that its price does not exceed 1 dollar (or 1 euro). However, the stock could prove to be a
very interesting investment.

French-based CGG (formally Compagnie Générale de Géophysique – Veritas) provides data, products and services
in Earth science, data science, sensing and monitoring for a wide range of industries and activities ranging
from geologic studies to seismic surveys to natural resources exploitation to infrastructure construction to
energy transition.

Because the P/E ratio amounting to infinity is not applicable here, we need to use the concept of the
Potential Payback Period (PPP) as explained in the article titled “How to evaluate stocks when the P/E ratio
becomes irrelevant in the cases of startups and turnaround situations (when EPS < 0 or EPS ≃ 0)” https://www.stockinternalrateofreturn.com/Startups.html

The PPP is a mathematical adjustment of the P/E ratio according to the varying earnings growth rate and
interest rate. If we consider the P/E ratio as a snapshot that is frozen on the profit of a single year,
the PPP can be compared to a video that captures the flow of profits over a large number of years (as
many years as it takes to equalize this future profit flow with the current stock price). Unlike the P/E
ratio, which can lose all meaning for certain stocks during certain periods, the PPP is a synthetic and
dynamic – more logical and more stable – metric that remains always meaningful in space and time and can
always be used for stock comparison.

Price as of March 12, 2014

EPS = Earnings per share

g = Expected earnings growth rate per annum after 2025

r = Long-term and risk-free interest rate

PPP = Potential Payback Period

Instant calculations of the PPP at https://www.stockinternalrateofreturn.com/instant_calculations.html

Considering CGG’s field of activities, a PPP – which is a kind of refined P/E ratio – of 4.76 makes the company rather attractive.

March 10, 2024

WITH A P/E RATIO OF ONLY 3

Surprisingly, Air France, the country’s flag carrier, despite regaining profitability since 2022, improving
financial health and demonstrating promising profit prospects, is unjustifiably the cheapest French company
with a P/E ratio of only 3. Even certain political and social risks fail to justify such an undervaluation.

AIR FRANCE share price as of March 8, 2024: €9.71

EPS: €3.14

P/E Ratio (“PER”): 3.09

Expected earnings growth rate (“g”): +7% per annum

Interest rate (“r”): 2.72%

Potential Payback Period (“PPP”): 2.97

The PPP is basically a mathematical adjustment of the P/E Ratio to the expected
earnings growth rate.

Instant calculations of the PPP at https://www.stockinternalrateofreturn.com/instant_calculations.html

COMPANIES WITH A P/E RATIO OF 42,

IS ACTUALLY ONE OF THE COUNTRY’S MOST ATTRACTIVE STOCKS WITH A PPP OF ONLY 11

SAFRAN share price as of March 8, 2024: €195.44

EPS: €4.69

P/E Ratio: 41.67

Expected earnings growth rate: +28% per annum

Interest rate: 2.72%

PPP: 11.00

March 06, 2024

The Potential Payback Period (PPP) is a mathematical adjustment of the P/E ratio according to the varying earnings growth rate. It’s a synthetic and dynamic metric for stock selection which is understandably showing an astonishing efficacy, especially with high-growth stocks like those propelled by the revolution of artificial intelligence (AI).

On October 7, 2023, we recommended: “NVIDIA: A strong buy on the basis of the PPP. Among the US major
high-growth stocks, NVIDIA is the most attractive in terms of PPP, even though with the highest P/E ratio.”
https://www.linkedin.com/feed/update/urn:li:activity:7116790087434035200/

NVIDIA stock price: +93.82% from October 7, 2023 ($457.62) to March 6, 2024
($874.00).

On February 9, 2024, we pointed: “SMCI: Second most attractive AI stock. Among the artificial
intelligence-propelled stocks, SMCI is the second most attractive after NVIDIA. This conclusion is based on
the PPP, which is a unique tool to evaluate and compare high-growth stocks with very high P/E ratios.
https://www.linkedin.com/feed/update/urn:li:activity:7162484219326222336/

SMCI stock price: +51.92% from February 9 ($740.29) to March 6, 2024
($1,124.70).

Data as of February 9, 2024

g = Earnings growth rate

r = Interest rate = 4.16%

PPP = Potential Payback Period

Instant calculations at https://www.stockinternalrateofreturn.com/instant_calculations.html

Sam Rainsy

March 02, 2024

This inspiring article was published on March 1, 2024

The Roaring 1990s vs The Roaring 2020s

By Edward Yardeni

https://www.linkedin.com/pulse/roaring-1990s-vs-2020s-edward-yardeni-psvme/

“There is a big jump reflecting upward revisions in the long-term prospects for the growth rate of the MegaCap-8 companies (i.e., Alphabet, Amazon, Apple, Meta, Microsoft, Netflix, Nvidia, and Tesla) following great earnings reports by some of them recently. The long-term earnings growth rate (LTEG) of the MegaCap-8 is up from 13.4% during the January 31, 2023 week to 38.9% during the February 23, 2024 week.”

This is my comment: But what is the real impact of an increase in the LTEG on the evaluation of the
MegaCap-8 companies? From Jan 31, 2023 to Feb 23, 2024, the LTEG increased from 13.4% to 38.9%. But the
Forward P/E also increased from 22.0 to 28.0 because of the increase in share prices. This increase in the
P/E may lead to believe that the shares have become more “expensive”. But over the same period, with the
same LTEG increase, the Potential Payback Period (PPP) decreased from 12.42 to 8.13 despite the increase in
share prices. This shows that the shares have become actually less “expensive”, which better explains the
continuous bull market since. The impact of a LTEG increase is better felt with the PPP than with the
Forward P/E because the former covers a longer period than the latter.

The PPP is a synthetic and dynamic metric for stock evaluation that mathematically adjusts the P/E ratio
according to varying earnings growth rates and interest rates. Professor Emeritus of Finance at ESSEC (a top
French business school) Patrice Poncet considers the PPP to be an “undeniable improvement” in financial
analysis. More information at https://www.stockinternalrateofreturn.com/Advantages-of-ppp-irr.html

Instant calculations at https://www.stockinternalrateofreturn.com/instant_calculations.html

Rainsy Sam

February 29, 2024

BASED ON THE POTENTIAL PAYBACK PERIOD (PPP)

The Potential Payback Period (PPP) is a mathematical adjustment of the P/E Ratio according to varying
earnings growth rates and interest rates. It’s a synthetic and dynamic metric in stock evaluation whose
relevance and efficacy are being proven.

Professor Emeritus of Finance at ESSEC (a top French business school) Patrice Poncet considers the PPP to be
an “undeniable improvement” in financial analysis.
More information at https://www.stockinternalrateofreturn.com/Advantages-of-ppp-irr.html

Send us the name of any company, in any sector, any country, and we will produce exclusively for you a free
evaluation like the one below titled “Stock selection among the nine largest semiconductor companies in
Japan”. Taking into account a risk factor and the visibility of each company, we can confirm that TOKYO
ELECTRON is the most attractive stock in its sector. But RENESAS
ELECTRONICS, with the lowest PPP in the
sector, is particularly undervalued and its earnings could grow faster than presently expected.

If you want any stocks you are holding now to be also evaluated on the basis of the PPP, just send us their
names. We can respond directly and privately to you.

Instant calculations at https://www.stockinternalrateofreturn.com/instant_calculations.html

February 17, 2024

Advanced Micro Devices, Alphabet, Amazon, Apple, Applied Materials, Broadcom, Intel, Meta, Microsoft, Nvidia,
Palantir Technologies, Qualcomm, Super Micro Computer, Tesla, Texas
Instruments

Data as of February 16, 2024

Yield on U.S. 10-Year Treasury Note: 4.28%

P/E Ratios in descending order

g = Earnings growth rate per annum

- Companies above the regression line are overvalued : Advanced Micro Devices (AMD), Broadcom, Apple,
Qualcomm, Microsoft, Texas Instruments.

- Companies on the regression line are fairly valued : Amazon, Tesla.

- Companies below the regression line are undervalued : Nvidia, Super Micro Computer, Meta, Alphabet, Intel,
Palantir Technologies, Applied Materials.

Nvidia could rise from $726 up to $1850 (+155%) and Super Micro Computer from $803 to $1900 (+135%) within
one to two years if the earnings forecasts are materialized.

Most data are from Yahoo Finance
https://finance.yahoo.com/quote/TXN?p=TXN&.tsrc=fin-srch

Simulations on earnings growth rates can be conveniently made by using this program for instant calculations
: https://www.stockinternalrateofreturn.com/instant_calculations.html

This approach is based on the concept of the Potential Payback Period (PPP). The PPP is a mathematical
adjustment of the P/E Ratio according to the expected earnings growth rate “g”, with a given interest rate
“r”.

More explanation of the PPP at https://www.stockinternalrateofreturn.com/Advantages-of-ppp-irr.html

The end product of the approach is represented by the regression line showing the relationship between the
PPP and the Beta as a risk factor. This regression line is a synthetic stock selection tool that combines
several fundamental factors that are essential in the determination of the stock value: the P/E ratio, the
company’s profit-making capacity (or earnings potential) through the earnings growth rate, a long-term
risk-free interest rate and the Beta as a measure of the risk associated with the stock.

This dynamic approach is based on a system of relative prices where the value of each stock is determined
relative to that of other stocks at a given moment.

Rainsy Sam

Investment manager

Former Cambodian Finance Minister

February 15, 2024

SINCE THE BEGINNING OF 2024, JAPAN AND TAIWAN STOCK MARKETS, WHICH WERE IDENTIFIED AS PRESENTING THE HIGHEST “RISK PREMIUM” AT THE END OF 2023, HAVE ACHIEVED THE BEST PERFORMANCES

A similar table with data as of December 28, 2023 was posted last year, with relevant explanation, at https://www.stockinternalrateofreturn.com/Stock-Market-Comparison.html

A stock's Internal Rate of Return (IRR) is to be compared with the yield of a long-term risk-free bond,
with
the difference between the two rates being the risk premium specific to each stock or stock market as a
whole. The risk premium may not be fully justified. At a given moment, it may be considered too high or
too
low, leading to corrective movements.

The concept and the advantages of the PPP and the IRR are explained in detail at
https://www.stockinternalrateofreturn.com/Advantages-of-ppp-irr.html

The reliability of these forecasts based on the concepts of
PPP
and IRR depends on the reliability and
accuracy of the forecasted data entered into the model, particularly the projected earnings growth
rate
for
the next 12 to 36 months. Any revision of earnings outlook in a stock market will lead to a
re-evaluation of
that market compared to other stock markets through a modification in the risk premium ranking.
Political
risk is put aside in this analysis which supposes “all else being equal”.

P/E Ratio = PER = Price Earnings Ratio.

g = Projected earnings growth rate for the next two or three
years.

r = Long-term interest rate on a risk-free bond (such as the
U.S.
10-Year Treasury Note).

PPP = Potential Payback Period. This is the time needed for the
investment in the purchase of a stock to be
"potentially paid back" through future profits progressing at rate "g" and discounted at rate "r".

IRR = Internal Rate of Return. This is the discount rate that must be applied to future profits made over the period corresponding to the PPP for these profits to equalize the current stock price. The IRR formula is directly derived from the PPP.

See mathematical demonstrations at
https://www.stockinternalrateofreturn.com/Mathematics.html

Source of data: The figures for P/E Ratio (excepted for
France’s) and projected earnings growth rates "g"
come from Simply Wall St at https://simplywall.st?via=rainsy
Because of continuous upward earnings revisions in the USA, the expected average earnings growth rate
for
that market (S&P 500) is revised from 15% to 20% per annum.

Rainsy Sam

February 11, 2024

Among artificial intelligence-propelled stocks, “Super Micro Computer” is the second most attractive after “Nvidia”. This conclusion is based on the Potential Payback Period (PPP) which is a tool that can be used to help evaluate and compare AI stocks with very high P/E Ratios.

Data as of February 09, 2024

Raw data from Yahoo Finance https://finance.yahoo.com/quote/TXN?p=TXN&.tsrc=fin-srch

Yield on U.S. 10-Year Treasury Note: 4.16%

P/E Ratios in descending order. The P/E Ratio varies from 1 to 15, but the PPP
which adjusts the P/E Ratio
according to the earning growth rate, only varies from single to double.

g = Earning growth rate per annum

Instant calculations at https://www.stockinternalrateofreturn.com/instant_calculations.html

February 10, 2024

“SUPER MICRO COMPUTER” WITH A P/E RATIO OF 58

For better stock comparisons the P/E ratio (PER) should be replaced with the Potential Payback Period (PPP) which is a mathematical adjustment of the P/E Ratio according to the expected earnings growth rate “g”, with a given interest rate “r”.

Instant calculation of the PPP at https://www.stockinternalrateofreturn.com/instant_calculations.html

More explanation of the PPP at https://www.stockinternalrateofreturn.com/Advantages-of-ppp-irr.html

CONCRETE EXAMPLES

With the above formula we can rigorously prove that “TEXAS INSTRUMENTS” with a P/E Ratio of 23 is
actually
more expensive than “SUPER MICRO COMPUTERS” with a P/E Ratio of 57, and also more expensive than
“NVIDIA”
with a P/E Ratio of 95.
This is due to the differentials in expected earnings growth rates: +10% for “TEXAS INSTRUMENTS”, +40%
for
“SUPER MICRO COMPUTERS” and +50% for NVIDIA, to be very cautious for the two last stocks.

Data as of February 09, 2024

Source: Yahoo Finance https://finance.yahoo.com/quote/NVDA?p=NVDA&.tsrc=fin-srch

A TOOL TO HELP EVALUATE AI STOCKS WITH VERY HIGH P/E RATIOS

Data as of February 09, 2024

Raw data from Yahoo Finance https://finance.yahoo.com/quote/TXN?p=TXN&.tsrc=fin-srch

Yield on U.S. 10-Year Treasury Note: 4.16%

Instant calculations at https://www.stockinternalrateofreturn.com/instant_calculations.html

Rainsy Sam

February 07, 2024

EVEN WITH A MORE MODERATE EARNINGS GROWTH RATE

PROJECTED FOR THE NEXT FIVE YEARS

(+50% per year instead of +70% in our previous analysis, or even +100% for many analysts)

NVIDIA Earnings growth rate

Source: Yahoo Finance https://finance.yahoo.com/quote/NVDA/analysis?p=NVDA

See more details on the PPP at

https://www.stockinternalrateofreturn.com/Advantages-of-ppp-irr.html

Earnings growth rate (g) = + 50% per annum (instead of +70% in our previous analysis).

Interest rate (r) = 4.02% (no change).

Beta 5Y Monthly) = 1.68 (no change).

PPP based on the Regression Line = (-1.2635 X 1.68) + 13.75 = 11.63 (instead of 8.20 in our previous
analysis).

P/E Ratio based on the Regression Line = 157.5 (instead of 388 in our previous analysis).

EPS = 7.61 (no change).

Price Targe = 157.5 X 7.61 = $1.198
(instead of $2,952 in our previous analysis).

Sam Rainsy

February 06, 2024

NVIDIA REMAINS THE MOST ATTRACTIVE

IN TERMS OF POTENTIAL PAYBACK PERIOD (PPP).

THE PPP IS A P/E RATIO ADJUSTED ACCORDING TO THE EXPECTED EARNINGS GROWTH RATE

Data as of Friday, February 02, 2024

Yield on U.S. 10-year Treasury bond : 4.02%

See more details on the PPP at

https://www.stockinternalrateofreturn.com/Advantages-of-ppp-irr.html

NVIDIA’s "objective price" can be determined from a regression line as follows:

DETERMINATION OF THE "OBJECTIVE PRICE" FOR NVIDIA STOCK

RELATIVE TO SIX OTHER STOCKS AMONG THE "MAGNIFICENT SEVEN"

BASED ON THE ABOVE REGRESSION LINE WITH FORECASTS AVAILABLE AS OF FEBRUARY 02, 2024

(MOST FIGURES ARE FROM YAHOO FINANCE https://finance.yahoo.com/quote/NVDA/)

Formula of the Regression Line: PPP = – 1.8879 Beta + 14.321

NVIDIA’s Beta (5Y Monthly) = 1.64 ——> PPP = 11.2248 ——> P/E Ratio = 388

EPS = 7.61 ——> Price = 2,952 versus 661.60 on February 02, 2024 (X 4.46 times)

Rainsy Sam

Membre de la SFAF

Ancien Ministre des Finances du Cambodge