Chet Yodel was walking briskly down the street. There was a lot on his mind -- his taxes were due, he had to have his teeth cleaned, and then there was the dry cleaner... he had left his cashmere jacket there last Tuesday, and it came back with spots on the sleeve. Those morons. That's when he heard The Whisper.

"Buy Chasen Dentique!" it hissed.

Chet wasn't sure he heard it. But those words, Chasen Dentique, hung in the air unmistakably.

*

Two days later. Breakfast. Frosted Mini Wheats. Halfway through a swallow of orange juice, Chet heard The Whisper again.

"Buy Chasen Dentique! It's growing 20% a year!"

There was no doubting it this time. He had heard it, and his interest was piqued. That day during his break at work, Chet went online and found the Chasen Dentique folder on The Motley Fool.

It seemed this company was the real deal. Its concept -- selling dentures over-the-counter at upscale shopping boutiques across the country -- had never been tried before. Nationwide the fashion-conscious and the well-to-do were seeking out Chasen Dentures as the Teeth of Choice. A Chasen label in a cover girl's gumline was, for now anyway, the mark of taste and discrimination. Furthermore, Chasen was the market leader -- Al's Choppers, the knockoff discount brand, could not match even 10% of Chasen's market share.

"I'll have to watch this one," said Chet to himself, always careful not to invest in haste.

*

All that week, Chet kept seeing the Chasen label everywhere. Even while his hygienist scraped away at his tartar buildup, Chet mused how Bob, the guy who worked in the cubicle next to his, was proudly sporting the Chasen logo on both of his eye teeth. His daughter had even asked if she could have some molars pulled to make room for some genuine Chasen bridgework. And the Chasen line of dental care products -- gum picks, waxed floss, and powdered denture adhesive -- were advertised on television the previous evening during an episode of Ellen. It seemed that Chasen Dentique was poised to take over the world.

"Buy Chasen Dentique!" said The Whisper. "Its P/E is only 30!"

"And perhaps I shall," mused Chet.

"And perhaps you should not," suggested the hygienist, pulling down her mask. It was Ms. Motli Fool, conveniently popping into the story at the crucial moment. "Just check out this and you'll understand why."

*How did Motli Fool know not to buy Chasen Dentique?*

1) Designer dentures is too stupid an idea to succeed, even as a hypothetical example.

2) Chasen Dentique's growth rate is too low to sustain its P/E.

3) Retail stocks typically require a higher growth rate before they show a profit.

4) Chasen Dentique's PEG ratio is only 0.66, and therefore a good short.

The answer is 2.

"Every Fool knows," said Motli, applying fluoride paste to her brush, "that the Fool Ratio, or PEG, compares a stock's price-to-earnings ratio with its growth rate. The higher the P/E, the greater the growth rate must be in order to sustain the stock's valuation. By dividing Chasen's P/E ratio -- 30 -- by its growth rate -- 20% -- we find that its Fool Ratio is a pricey 1.5. And that's not a good candidate for a long-term stock investment, no matter how strong the underlying company is."

Ms. Fool turned on the brush and began to scrub Chet's incisors. "As a matter of fact," she continued, "Chasen's valuation is so high, it might be a good candidate for shorting."

"Hauangh anghrahahur," said Chet gratefully through Motli's gentle fingers.

"Now," said Motli, "rinse and spit, please."

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