Editor's note: Welcome to "Booyah Breakdown," an explanation of certain terms and topics Jim Cramer discusses on his "Mad Money" TV show. Feel free to
How did Budweiser become the king of beers?
I certainly don't think it's "king." I'm a Miller Lite girl. But apparently Bud had enough cheerleaders -- or drunken fraternity boys -- out there to grant it that title.Well, the same cheering squad must've been in high force when the price-to-earnings ratio surfaced. Many believe that price-to-earnings is the king of the ratios, arguing that it's the simplest way to measure how expensive a company's stock is. "If you're going to use just one metric, P/E is probably the one to go with," says Connor Browne, co-manger of the (TVAFX) Thornburg Value fund. And Jim Cramer mentions it on "Mad Money" constantly, saying he won't buy a company that has a P/E is more than two times its growth rate. So, if a company's growth rate is 30%, its P/E better be below 60, or he's not going near it. But while Jim often refers to P/E, we all know it's not the only king in his castle. He always looks at the company's fundamentals and the current market environment when making a buy/sell decision. Still, we must pay homage to the P/E ratio. Benjamin Graham, the great