We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Zacks.com highlights: Accuray, Berkshire Hills Bancorp, A. Schulman, Sysco and Tailored Brands
Read MoreHide Full Article
For Immediate Release
Chicago, IL – Feb 1, 2018 - Stocks in this week’s article include: Accuray (ARAY - Free Report) , Berkshire Hills Bancorp (BHLB - Free Report) , A. Schulman , Sysco (SYY - Free Report) and Tailored Brands .
Screen of the Week of Zacks Investment Research:
Why the P/S Ratio Is My Favorite Valuation Metric
This week, I'm going to focus on the Price to Sales ratio for finding great stocks at great values.
The Price to Sales ratio is a great valuation metric. And given the recent run-up in stocks, value, to me, is becoming more and more important.
In fact, aside from the Zacks Rank, if I could only use one item to screen and pick stocks with, this item would be the one.
Definition
Let's first start with a definition.
The Price to Sales ratio is simply: Price divided by Sales
If the Price to Sales ratio is 1 that means you're paying $1 for every $1 of sales the company makes.
A price to sales ratio of 2 means you're paying $2 for every $1 of sales the company makes.
As you might have guessed, the lower the Price the Sales ratio, the better.
A price to Sales ratio of .5 means you're paying 50 cents for every $1 of sales the company makes.
And paying less than a dollar for a dollar's worth of something is a good bargain.
One of the reasons I like the Price to Sales ratio is because it looks at sales rather than earnings, like the P/E ratio does.
And sales are harder to manipulate on an income statement than earnings.
Secondly, I'd be hard pressed to find a screen where adding the Price to Sales ratio didn't improve it.
Price to Sales Study
For me, I prefer to look for stocks with a Price to Sales ratio under 1. Although, I'm willing to go up to 4, depending on the industry.
But in my testing, as the illustration below shows, those with a Price to Sales ratio of 1 or less produced the best returns. Between 1 and 2 also outperformed pretty significantly. But once you got over 4, the odds were against you.
· P/S range greater than or equal to 0 and less than or equal to 1:Average Annual Return: 17.8%
· P/S range greater than 1 and less than or equal to 2: Average Annual Return: 11.1%
· P/S range greater than 2 and less than or equal to 3: Average Annual Return: 7.3%
· P/S range greater than 3 and less than or equal to 4: Average Annual Return: 3.8%
· P/S range greater than 4: Average Annual Return: -7.9%
But the best way to use it, I've found, is to find stocks with a Price to Sales ratio below the median for its Industry.
And that's what we'll be focusing on in this week's screen.
Get the remaining stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back testing software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Zacks.com highlights: Accuray, Berkshire Hills Bancorp, A. Schulman, Sysco and Tailored Brands
For Immediate Release
Chicago, IL – Feb 1, 2018 - Stocks in this week’s article include: Accuray (ARAY - Free Report) , Berkshire Hills Bancorp (BHLB - Free Report) , A. Schulman , Sysco (SYY - Free Report) and Tailored Brands .
Screen of the Week of Zacks Investment Research:
Why the P/S Ratio Is My Favorite Valuation Metric
This week, I'm going to focus on the Price to Sales ratio for finding great stocks at great values.
The Price to Sales ratio is a great valuation metric. And given the recent run-up in stocks, value, to me, is becoming more and more important.
In fact, aside from the Zacks Rank, if I could only use one item to screen and pick stocks with, this item would be the one.
Definition
Let's first start with a definition.
The Price to Sales ratio is simply: Price divided by Sales
If the Price to Sales ratio is 1 that means you're paying $1 for every $1 of sales the company makes.
A price to sales ratio of 2 means you're paying $2 for every $1 of sales the company makes.
As you might have guessed, the lower the Price the Sales ratio, the better.
A price to Sales ratio of .5 means you're paying 50 cents for every $1 of sales the company makes.
And paying less than a dollar for a dollar's worth of something is a good bargain.
One of the reasons I like the Price to Sales ratio is because it looks at sales rather than earnings, like the P/E ratio does.
And sales are harder to manipulate on an income statement than earnings.
Secondly, I'd be hard pressed to find a screen where adding the Price to Sales ratio didn't improve it.
Price to Sales Study
For me, I prefer to look for stocks with a Price to Sales ratio under 1. Although, I'm willing to go up to 4, depending on the industry.
But in my testing, as the illustration below shows, those with a Price to Sales ratio of 1 or less produced the best returns. Between 1 and 2 also outperformed pretty significantly. But once you got over 4, the odds were against you.
· P/S range greater than or equal to 0 and less than or equal to 1:Average Annual Return: 17.8%
· P/S range greater than 1 and less than or equal to 2: Average Annual Return: 11.1%
· P/S range greater than 2 and less than or equal to 3: Average Annual Return: 7.3%
· P/S range greater than 3 and less than or equal to 4: Average Annual Return: 3.8%
· P/S range greater than 4: Average Annual Return: -7.9%
But the best way to use it, I've found, is to find stocks with a Price to Sales ratio below the median for its Industry.
And that's what we'll be focusing on in this week's screen.
And that's what we're screening for today…
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/commentary/147584/why-the-ps-ratio-is-my-favorite-valuation-metric
Get the remaining stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back testing software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.