Validea’s “Strategy of the Week” series highlights one of our guru-based investment strategies, offering a deeper understanding of the model’s core fundamentals, the rationale behind them, and a look at how the strategy has performed over time. This feature blends educational insight with actionable ideas to help you better navigate proven approaches to investing.
This Week’s Featured Strategy: The Ken Fisher Super Stocks Model
Ken Fisher may be best known today for building one of the largest Registered Investment Advisors (RIAs) in the U.S.—a success powered by savvy marketing, sharp insights, and a deep understanding of investor psychology. But long before he became a household name in the investment world, Fisher made waves in the 1980s with a novel concept: using the Price/Sales ratio as a primary tool for identifying undervalued stocks.
The son of legendary investor Philip Fisher—widely regarded as the “Father of Growth Investing”—Ken Fisher combined his father’s growth philosophy with a data-driven value mindset. In his bestselling book Super Stocks, Fisher laid out a compelling argument that sales were a more stable and reliable metric than earnings, which could fluctuate due to accounting or business cycle noise.
That idea—now widely adopted—was groundbreaking at the time. Fisher’s model used low Price/Sales ratios to identify stocks trading at discounts to their revenue base. He paired this with a focus on strong earnings growth, high profit margins, and prudent financial management, including low debt. For tech and healthcare firms, he went a step further by introducing a proprietary Price/Research ratio, helping to value companies based on innovation spending.
While Fisher’s approach has evolved over the decades, his Price/Sales-based strategy continues to deliver strong results using Validea’s interpretation.
Why Price/Sales Matters
Fisher recognized that earnings are often noisy, especially over short periods. Companies can report weaker earnings due to temporary issues like R&D investments, facility upgrades, or accounting changes. But sales, on the other hand, tend to be more stable and give investors a clearer view of the company’s underlying business strength.
This insight led him to favor companies with:
- Low P/S ratios (especially < 0.75 for non-cyclical firms)
- Strong long-term EPS growth
- Healthy margins
- Low debt levels
- Positive free cash flow
For certain sectors (like tech or biotech), he even considered the amount a company spends on research as a differentiator—leading to the creation of the Price/Research ratio, or PRR.
Performance Highlights
Validea’s Fisher-inspired model has been running since 2003, using a ten-stock, monthly rebalancing approach. Since then, the strategy has returned 805.4%, outperforming the S&P 500 by more than 360 percentage points.
While returns have fluctuated year-to-year—as any active strategy does—the long-term results highlight the value of focusing on revenue-based valuation and growth fundamentals.
Returns are model returns and do not reflect actual trading. Full performance disclaimer
Best Years:
- 2023: +66.1%
- 2006: +40.0%
- 2016: +42.1%
Challenging Periods:
- 2008: -36.9%
- 2015: -18.1%
- 2018: -26.0%
This performance illustrates both the potential upside and the volatility investors must endure when using high-conviction strategies like this one.
Current Top Stocks Based on the Fisher P/S Model
Below are the highest-scoring stocks under Validea’s Fisher Super Stocks model. Click any ticker to view the full Guru Analysis.
| Ticker | Company | Current Score | Latest Close | Market Cap ($mil) | PE Ratio | EPS Growth | Yield | Relative Strength | Shareholder Yield |
|---|---|---|---|---|---|---|---|---|---|
| TMHC | TAYLOR MORRISON HOME CORP | 100% | $57.59 | $5,859 | 7.0 | 31.6% | 0.0% | 58 | 4.0% |
| MHO | M/I HOMES INC | 100% | $109.10 | $2,958 | 5.5 | 23.2% | 0.0% | 51 | 1.6% |
| CVE | CENOVUS ENERGY INC (US) | 100% | $12.89 | $23,489 | 10.9 | 48.3% | 4.5% | 33 | -5.9% |
| GCT | GIGACLOUD TECHNOLOGY INC | 100% | $13.77 | $552 | 4.5 | 106.4% | 0.0% | 21 | -1.1% |
| VC | VISTEON CORP | 100% | $74.83 | $2,026 | 7.6 | 56.8% | 0.0% | 36 | 1.6% |
| GIII | G-III APPAREL GROUP LTD | 90% | $25.38 | $1,114 | 6.0 | 27.0% | 0.0% | 55 | 17.4% |
| GRBK | GREEN BRICK PARTNERS INC | 90% | $55.89 | $2,487 | 6.6 | 38.9% | 0.0% | 57 | 3.3% |
| TOL | TOLL BROTHERS INC | 90% | $98.39 | $9,784 | 6.8 | 34.0% | 0.9% | 45 | 7.0% |
| EME | EMCOR GROUP INC | 90% | $354.54 | $16,122 | 16.5 | 50.7% | 0.3% | 59 | 4.6% |
| PHM | PULTEGROUP INC | 90% | $97.75 | $19,705 | 6.6 | 26.1% | 1.0% | 49 | 9.3% |
Final Thoughts
The Ken Fisher Super Stock model offers a unique blend of value and growth investing—centered around a stable, underutilized metric: revenue. Its combination of fundamental rigor and historical success make it a strong candidate for investors looking to avoid accounting noise and focus on sustainable business performance.
Whether you’re a fan of Fisher’s contrarian style or simply looking for a new way to identify undervalued growth opportunities, the Price/Sales model may be a valuable in your investment process.
Explore More Ken Fisher Resources on Validea
- 📈 Top Stocks Based on Fisher Model – See which stocks currently score highest using this strategy.
- 🧠 Detailed Guru Analysis Tool – Search for any stock and view how it scores under the Fisher model and others.
- 🧰 Stock Screener: Ken Fisher Criteria – Screen the market using Fisher’s investing rules to find new stock ideas.
