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Strategies & Market Trends : Bosco & Crossy's stock picks,talk area -- Ignore unavailable to you. Want to Upgrade?

To: LemonHead who wrote (2926)	11/29/1998 5:15:00 AM
From: Crossy	Read Replies (1) \| Respond to of 37387

LemonHead, PSR is price to sales ratio. The lower the ratio the cheaper the stock. I like it better than PE ratios because 1) PSR reacts faster than PE or PEG - top line growth is what counts in this world not the beancounting (try beancounting PE with Internet stocks - You never invested a singel dollar into YHOO or AMZN if You used PE ratio as Your guiding hand <g>) but You would have lost a fortune with CTYS or SFC 2) PSR shows You what a company is worth with "best management" practices applied. It reveals "hidden value" of a business and is a better proxy for future cashflow possibilities. So it's a good indicator on what-if-situations 3) PSR and variants are used by succesful investors like Warren Buffet. But beware, PSR is highly linked with Net margin on sales. The higher the net margin, the higher a "cheap" PSR can be. For example PSR of 2.00 and Net Margin of 10% is quite cheap, whereas PSR of 2.00 and Net Margin of 1% is not. Due to different gross & net margins per industry or even per business model, You have to compare the PSR within this given context. However for Internet stocks, PSR is probably the best indicator around.. best regards CROSSY