10-08-2012, 09:17 AM
Price to Sales Ratio is the key concept behind Kenneth Fisher's Super Stocks book. By his definition, a super stock is the stock of a business which:
1) Can generate internally funded future long-term average growth of approximately 15-20%
2) Will generate future long-term average after-tax profit margin above 5 percent
3)Is bought at a PRice Sales Ratio of less than 0.75.
A Super Stock is a potential 3 to 10 baggers in a holding period of 3 to 5 years. And unlike the sustainable competitive advantage that Warren Buffett looks for, Kenneth Fisher follows his father path in looking more towards management competency and other organisational superiority.
This is one of the quote from the book that I like a lot:
"High margins don't just happen. There are more ways to waste margin than to earn them. High margin happen because people make them happen."
I highly recommend reading this book as it will provide pretty fresh perspective in looking at stocks that does not have moat. PSR should be part of an investor's arsenal other than PER, PB, ROE, FCF.
1) Can generate internally funded future long-term average growth of approximately 15-20%
2) Will generate future long-term average after-tax profit margin above 5 percent
3)Is bought at a PRice Sales Ratio of less than 0.75.
A Super Stock is a potential 3 to 10 baggers in a holding period of 3 to 5 years. And unlike the sustainable competitive advantage that Warren Buffett looks for, Kenneth Fisher follows his father path in looking more towards management competency and other organisational superiority.
This is one of the quote from the book that I like a lot:
"High margins don't just happen. There are more ways to waste margin than to earn them. High margin happen because people make them happen."
I highly recommend reading this book as it will provide pretty fresh perspective in looking at stocks that does not have moat. PSR should be part of an investor's arsenal other than PER, PB, ROE, FCF.