This choice is derived from the Average Low P/E Ratio (from the Section 3 chart, Row 7, Column E) and the Estimated Low Earnings Per Share.
After making these calculations, you must select the stock's Future Low Price. Remember, to paraphrase Peter Lynch, "a stock's price can always go down until it hits zero." While you don't have to worry about this possibility with most growth stocks, you should always carefully consider your choice of a Low Price. Some investors always choose a Low Price that is at least 10% to 25% below the current price, to give a buffer in case of a general market correction. Other investors find that the Low Price calculated by multiplying the Average Low P/E Ratio by the Low EPS is the most realistic. Whatever your choice, your Low Price should never be higher than the stock's current price.
Again, you should always apply judgement to the choice of a Low P/E Ratio, just as you did in the choice of a High P/E Ratio. If the stock's Average Low P/E Ratio is more than 15 or 20, that might signal a downward revision.
The Estimated Low Earnings Per Share also generates confusion because this figure appears nowhere on the SSG form. The "by-the-book" method of analysis suggest using the most recent year's EPS, on the assumption that a growth company's most recent year's EPS will always be the lowest of the coming five years, as the company continues to increase its earnings.
For fast-growing companies, you may wish to use the EPS from the most recent four quarters, in lieu of the most recent year's. This takes the assumption of growth one step further, and will give you a Low Price choice that is, in most cases, very reasonable.
The "Average Low Price of the Last Five Years" is found in Row 7, Column B, of the chart in Section 3.
The "Recent Severe Market Low Price" requires you to select a Low Price from the Section 3 chart, depending on what you consider "recent." Some investors consider the last five years to be recent, some only look at the last three years. You must use your own judgement in selecting a low price here.
The "Price Dividend Will Support" is calculated by dividing the Present Dividend (for the entire year, often referred to as the "indicated dividend") by your choice of a High Yield from Column H in Section 3. Usually, you will use the most recent year's High Yield, but you must apply your own judgement.
This choice is relevant when a stock is being purchased because of its dividend income potential, and is not very helpful in choosing a low price for a growth stock.