PDSnet Glossary

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Definition

A term used to describe a share which is highly rated by investors. High quality shares are usually large companies which have a long track record of generating growing profits and paying out increasing dividends. The quality of a share is expressed in its earnings multiple or price:earnings ratio (P:E). A high P:E means investors are willing to pay much more for the company's future earnings than those of a poorly rated company which has erratic and unreliable earnings. High quality shares are also called "blue chips".

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