PE is the function of growth

  1. Usually higher PE is awarded for high growth companies. Companies have low NPM but since high growth QoQ then Higher PE is awarded. So sales growth needs to be calculated along with sales growth. PES Matters
  2. Operating Margins expansion is also the function of Higher PE.
  3. Demand Supply equation of the Shares is also the cause of Higher P
  4. EPS growth is the only factor of high PE but required to be calculated along with sales growth so PEG matters.

Note:
If a stock has growth and runs on lower PE then it is a possible multibagger.
If PE <= sales growth best case If PE >= 2* Sales Growth then almost nothing is left.
It also indicates to continuously check sales growth with profit growth and EPS GROWTH.

PE expansion is the main signs of a multibagger stock potential.