So, what is the best tool, asking all threadmates, price to cash flow or future P/E's or something else?
The one I tend to look at is price to sales because it's so easy to look up. Anything above 15 scares me because I, like Stan, am a worrier too. Worse, I'm not enough of a visionary.
When I really become dilligent, I calculate the enterprise value to sales ratio:
market cap - cash + debt / sales
After I've done that, I realize that I'm looking at gorillas so I remind myself to focus, focus, focus. I throw the above stuff away, watch the top line growth, the changing dynamics, and barring no bad signs, continue holding for the long term regardless of what the market does to the stock. At least that's what I'd like to think I'll do.
--Mike Buckley |
