Re: [CANSLIM] Fundamental Analysis: P/S - I Love You (Sometimes)

From: "Jonathan Lobatto" <jlobatto@nyc.rr.com>
Subject: Re: [CANSLIM] Fundamental Analysis: P/S - I Love You (Sometimes)
Date: Thu, 27 Mar 2003 10:55:06 -0500
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Not only that, but basically each industry has a P/S ratio that's =
totally dependent on the typical profit margin of that industry. For =
instance, a supermarket may have a P/S ratio far below 1.0 because they =
operate on a miniscule margin. Ken Fisher published a newsletter about =
15-20 years ago that used a P/S ratio to pick stocks. It was not very =
successful and he sold the letter to a woman who finally gave up the =
whole approach. Not to say it's useless, but at the very least it's a =
far cry from CANSLIM.
  ----- Original Message -----=20
  From: Tom Worley=20
  To: canslim@lists.xmission.com=20
  Sent: Thursday, March 27, 2003 10:35 AM
  Subject: Re: [CANSLIM] Fundamental Analysis: P/S - I Love You =
(Sometimes)


  Gene, a p/s ratio of 1.0 or less is fine if you are looking for fallen =
angels, bottom fishing, value shopping, etc. But I don't see what that =
has to do with CANSLIM

  Because expectations drive price, and thus high expectations would =
create a high p/s ratio, I am automatically suspicious whenever I find a =
stock hitting new highs, with great CANSLIM fundamentals, but a =
relatively low p/s ratio (generally under 2.0). It forces me to dig =
deeper to figure out why the price does not already reflect a higher =
premium.

  ----- Original Message -----=20
  From: Gene Ricci=20
  To: canslim@lists.xmission.com=20
  Sent: Wednesday, March 26, 2003 8:50 PM
  Subject: [CANSLIM] Fundamental Analysis: P/S - I Love You (Sometimes)


  Appreciate comments on this article.

  Gene



  Fundamental Analysis: P/S - I Love You (Sometimes)
  ------------------------------------------------------------
  Investors are always seeking ways to compare the value of stocks.=20
  The price-to-sales ratio provides a simple approach: take the=20
  company's market capitalization (the number of shares multiplied=20
  by the share price) and divide it by the company's total sales=20
  over the past twelve months. The lower the ratio, the more attractive=20
  the investment. As easy as it sounds, price-to-sales provides=20
  a useful measure for sizing up stocks. But investors need to=20
  be mindful of the ratio's potential pitfalls and possible=20
  unreliability.=20

  Read this article at:
  http://www.investopedia.com/articles/fundamental/03/032603.asp


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<DIV><FONT face=3DVerdana color=3D#0000ff>Not only that, but basically =
each industry=20
has a P/S ratio that's totally dependent on the typical&nbsp;profit =
margin of=20
that industry. For instance, a supermarket may have a P/S ratio far =
below 1.0=20
because they operate on a miniscule margin. Ken Fisher published a =
newsletter=20
about 15-20 years ago that used a P/S ratio to pick stocks. It was not =
very=20
successful and he sold the letter to a woman who finally gave up the =
whole=20
approach. Not to say it's useless, but at the very least it's a far cry =
from=20
CANSLIM.</FONT></DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #0000ff 2px solid; MARGIN-RIGHT: 0px">
  <DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
  <DIV=20
  style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
  <A title=3Dstkguru@bellsouth.net =
href=3D"mailto:stkguru@bellsouth.net">Tom=20
  Worley</A> </DIV>
  <DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
  =
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
 </DIV>
  <DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Thursday, March 27, 2003 =
10:35=20
  AM</DIV>
  <DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] =
Fundamental=20
  Analysis: P/S - I Love You (Sometimes)</DIV>
  <DIV><BR></DIV>
  <DIV><FONT face=3DArial>Gene, a p/s ratio of 1.0 or less is fine if =
you are=20
  looking for fallen angels, bottom fishing, value shopping, etc. But I =
don't=20
  see what that has to do with CANSLIM</FONT></DIV>
  <DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
  <DIV><FONT face=3DArial>Because expectations drive price, and thus =
high=20
  expectations would create a high p/s ratio, I am automatically =
suspicious=20
  whenever I find a stock hitting new highs, with great CANSLIM =
fundamentals,=20
  but a relatively low p/s ratio (generally under 2.0). It forces me to =
dig=20
  deeper to figure out why the price does not already reflect a higher=20
  premium.</FONT></DIV>
  <DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
  <DIV style=3D"FONT: 10pt arial">----- Original Message -----=20
  <DIV style=3D"BACKGROUND: #e4e4e4; font-color: black"><B>From:</B> <A=20
  title=3Dgenr@swbell.net href=3D"mailto:genr@swbell.net">Gene Ricci</A> =
</DIV>
  <DIV><B>To:</B> <A title=3Dcanslim@lists.xmission.com=20
  =
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
 </DIV>
  <DIV><B>Sent:</B> Wednesday, March 26, 2003 8:50 PM</DIV>
  <DIV><B>Subject:</B> [CANSLIM] Fundamental Analysis: P/S - I Love You=20
  (Sometimes)</DIV></DIV>
  <DIV><BR></DIV>
  <DIV><FONT face=3D"Comic Sans MS" size=3D4>Appreciate comments on this =

  article.</FONT></DIV>
  <DIV><FONT face=3D"Comic Sans MS" size=3D4></FONT>&nbsp;</DIV>
  <DIV><FONT face=3D"Comic Sans MS" size=3D4>Gene</FONT></DIV>
  <DIV style=3D"FONT: 10pt arial">
  <DIV><FONT face=3D"Comic Sans MS" size=3D4></FONT>&nbsp;</DIV></DIV>
  <DIV><BR></DIV>
  <DIV>Fundamental Analysis: P/S - I Love You=20
  =
(Sometimes)<BR>----------------------------------------------------------=
- --<BR>Investors=20
  are always seeking ways to compare the value of stocks. <BR>The =
price-to-sales=20
  ratio provides a simple approach: take the <BR>company's market =
capitalization=20
  (the number of shares multiplied <BR>by the share price) and divide it =
by the=20
  company's total sales <BR>over the past twelve months. The lower the =
ratio,=20
  the more attractive <BR>the investment. As easy as it sounds, =
price-to-sales=20
  provides <BR>a useful measure for sizing up stocks. But investors need =
to=20
  <BR>be mindful of the ratio's potential pitfalls and possible=20
  <BR>unreliability. <BR><BR>Read this article at:<BR><A=20
  =
href=3D"http://www.investopedia.com/articles/fundamental/03/032603.asp">h=
ttp://www.investopedia.com/articles/fundamental/03/032603.asp</A><BR></DI=
V>
  <BLOCKQUOTE dir=3Dltr=20
  style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px"><FONT=20
    face=3D"Comic Sans MS"=20
size=3D4></FONT>&nbsp;</BLOCKQUOTE></BLOCKQUOTE></BODY></HTML>

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