Daniel Miller and Jason Robinson on Their Valuation Criteria
- Posted by stedge
- on August 2nd, 2011
The valuation criteria we use when selecting a stock investment with strong underlying fundamentals is based on a number of ratios (mostly price ratios).
These ratios and the benchmarks we use to screen them against are generally as follows:
1. Current P/E < 12
2. Current P/E < industry average
3. Forward P/E < 15
4. Price/Sales < 2
5. Price/Sales < ind. avg.
6. Price/Book < 2
7. Price/Book < ind. avg.
8. Price/Cash Flow < 10
9. Price/Cash Flow < ind. avg.
10. PEG (5 year) < 1
11. PEG (5 year) < ind. avg.
12. Book Value/Share > 5
13. Book Value/Share > ind. avg.
14. Enterprise Value/EBITDA < 10
15. Enterprise Value/Revenue < 2
If a stock passes most of these criteria, as well as exhibiting overall healthy
fundamentals in the BeanScreen, we will strongly consider taking a position (using
Buy Limits). In addition, we often ask the TA experts on the StockTwits stream
where they see long- and short-term support levels. This may help us in finding an
optimal entry point when placing our Buy Limit.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus