If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark PE ratio, we now have a high and low PE ratio for each year. We can use these ratios to calculate a high and a low stock price for the next year. Suppose we have the following information on a particular company over the past four years:

Earnings are projected to grow at 7 percent over the next year.

What is your high target stock price over the next year?

What is your low target stock price over the next year?

Year 1 Year 2 Year 3 Year 4 High price Low price EPS $ 98.30 121.90 131.30$147.93 116.45 11.80 73.13 7.58 89.24 9.33 69.92 10.41