While investors and the media focus on a stock’s PE ratio, investing guru Kenneth Fisher affords more attention to the price-sales ratio as a valuation measure, writes Validea CEO John Reese in a recent Forbes article.
Reese outlines the Fisher investment philosophy and related criteria that inspired one of his stock screening models. Using this model, Reese identifies the following five high-scoring picks:
- Steelcase (SCS) provides an integrated portfolio of furniture settings, user-centered technologies and interior architectural products. The company has a favorable price-to-sales ratio as well as long-term earnings-per-share growth.
- Manpower Group (MAN) is a provider of workforce solutions and services with strong price performance and persistent earnings-per-share growth as well as a favorable price-sales ratio.
- Magna International (USA) (MGA) is a global automotive supplier favored for its three-year average net profit margin and ratio of price-earnings to growth in earnings-per-share. Price-sales and debt-equity ratios both earn high marks.
- Fresh Del Monte Produce (FDP) is a holding company that, through its subsidiaries, is engaged in the sourcing, transporting and marketing of fresh and fresh-cut produce as well as prepared food products. Long-term EPS growth and free cash-per-share both get a thumb’s up.
- Cooper Tire & Rubber Co. (CTB) is a manufacturer and marketer of replacement tires with strong price-sales and free cash-per-share. Three-year average net profit margin adds appeal.
