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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (47061)	3/16/2012 10:40:58 PM
From: grahamcracker	Read Replies (1) of 78704

<< "At 1% margins, a slight miss leads to losses.">> <<That sometimes seems to be the reason that people won't buy such stocks. In my experience, I've found that that concern about low absolute margins to be almost unfounded. First, companies can often go years or decades doing okay with low margins. Especially if they have a lot of sales per share (low p/sales ratio). Grocery chains, for example. >> Paul - I agree. The grocery business is a high volume, low margin business eternally, never mind decades. Looking at profit margin misses the point. Look at ROA and ROE, not profit margins for this type of business. Sure, you won't find hit-it-out-of-the-park Microsoft numbers (for which you'll typically pay through the nose), but you will often find them sufficient. I find boring is good when looking for values. [sorry to barge in. I saw the name of this board - my alias should explain my interest].

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