Dear fellow investors,
I have had a good deal of success over the past few years investing in companies whose market price was a low multiple of sales. In other words for every dollar of share price they had up to ten dollars of sales or a price to sales ratio of .10. Although this extreme is hard to find there are stocks that trade in the .5 range or less. This strategy is not one for traders or for those faint of heart, because it involves longer holding periods (up to several years) and living through the ups and downs of markets generally. It involves finding companies:in the early stages of turnaround (or having that potential), new management or ownership, undervalued assets, money in the till (hard to undervalue), financial staying power, no analytical following (too small to be of interest to institutional investors).
Tracking these companies can also yield additional profits once the stock starts to move. Three examples of such stocks which have worked for me are Mitel (it had cash, sales, and finally new ownership), Riley's Datashare, now International Datashare (undervalued assets, new ownership) and Air Canada. Today companies like Devtek(T.DEK.A), SIGNATURE BRANDS (T.SBX), PALLET PALLET (T.PLT), are some that seem to fit the bill. I am looking for help in identifying and researching these types of opportunities and a forum to discuss our mutual findings. It can be a truly rewarding exersize.
Sincerely,
AL Cern |
