It makes sense to pay more for a stock whose earnings grow at a faster rate. Now, how much more should be paid would be determined by dividing a company’s PE multiple with its growth ratio. But growth is a function of many variables and that is the challenge which one needs to navigate. But the effort saves trouble which many may face later on. Especially in sectors like banking and financial services which have large numbers of stocks which on face of it appear cheap but are actually not.
