How I compute the right P/E

I would expect a good company to grow at at least twice as fast as the overall economy. So, if the GDP is about 7%, I would expect the company to grow at 14%. With a 14% growth rate, the appropriate P/E would be around 9+0.5*14 = 16. The 9 is from MoneyChimp which roughly has all the unknowns incorporated into when you roughly know how the EPS might grow. If you are willing to pay higher P/E multiples, one should be fairly confident that the company can grow at a much faster rate than 14% which I think only a few companies would be able to pull off.