| This week, I'm going to focus on one of my favorite | | | | |
| valuation metrics for determining a company's under or | | | | * Last Earnings Surprise greater than 0 |
| overvaluation. Let's first start with a definition. The Price | | | | (Positive EPS Surprise) |
| to Sales ratio is simply: Price divided Sales | | | | |
| | | | | * Last Sales Surprise greater than 0 |
| If the Price to Sales ratio is 1, then that means you're | | | | (Positive Sales Surprise) |
| paying $1 for every $1 of sales the company makes. | | | | |
| A price to sales ratio of 2 means you're paying $2 for | | | | * Price to Sales less than or equal to Median Price to |
| every $1 of sales the company makes. As you might | | | | Sales for its Industry |
| have guessed, the lower the Price the Sales ratio, the | | | | (Valuations that are lower than their Industry.) |
| better. A price to Sales ratio of .5 means you're | | | | |
| paying 50 cents for every $1 of sales the company | | | | * Price greater than or equal to $5 |
| makes. And paying less than a dollar for a dollar's | | | | |
| worth of something is a good bargain. | | | | * Avg. 20 Day Volume greater than or equal to |
| | | | | 100,000 |
| One of the reasons I like the Price to Sales ratio is | | | | |
| because it looks at sales rather than earnings like the | | | | Here are 5 stocks from this week's list: |
| P/E ratio does. And sales are harder to manipulate on | | | | - JAKK - JAKKS Pacific, Inc. |
| an income statement than earnings. Secondly, I'd be | | | | - POL - PolyOne Corp. |
| hard pressed to find a screen where adding the Price | | | | - ETN - Eaton Corp. |
| to Sales ratio didn't improve it. | | | | - CSX - CSX Corp. |
| | | | | - BLT - Blount International Inc. |
| For me, I prefer to look for stocks with a Price to | | | | |
| Sales ratio under 1. Although, I'm willing to go up to 4, | | | | Sign up now for your 2 week free trial to the |
| depending on the industry. But I've found that the best | | | | Research Wizard and get the rest of the stocks on |
| way to use it is to find stocks with a Price to Sales | | | | this list. Start using this screen and the Price to Sales |
| ratio below the median for its Industry. | | | | ratio in your own trading or create your own strategies |
| | | | | and test them before you invest. Know what to buy |
| And that's what we'll be focusing on in this week's | | | | and when to sell. |
| screen. Let's first start with: | | | | |
| * Zacks Rank less than or equal to 2 | | | | Disclosure: Officers, directors and/or employees of |
| (Only stocks with a Zacks Rank of a Strong Buy or | | | | Zacks Investment Research may own or have sold |
| Buy get through.) | | | | short securities and/or hold long and/or short positions |
| | | | | in options that are mentioned in this material. An |
| * Projected Growth Rate greater than or equal to | | | | affiliated investment advisory firm may own or have |
| Projected Growth Rate for the S&P | | | | sold short securities and/or hold long and/or short |
| (Above market growth rates.) | | | | positions in options that are mentioned in this material. |