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MagicDiligence (< 20)

Top 20 Magic Formula Stocks by Price/Sales Ratio



December 01, 2008 – Comments (2) | RELATED TICKERS: STX , WDC , RSHCQ

Several studies have shown that low price-to-sales ratio, not price-to-earnings or price-to-book, has been the most reliable indicator of outperforming value stocks. This article shows the top 20 current Magic Formula stocks with the lowest price-to-sales ratios.


2 Comments – Post Your Own

#1) On December 01, 2008 at 10:41 AM, ikkyu2 (97.93) wrote:

Seems like a lot of work to get results that track the broad market nearly precisely.

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#2) On December 01, 2008 at 11:58 AM, russiangambit (28.83) wrote:

Mantiwoc, KBR - may be.

Radioshack and Western Digital - are you serious?

The market don't trade on fundamentasls and such. It trades on a story and industries. And this approach doesn't take it into account. I like IBD approach better, - it looks at strongest industries first and then at the strongest stocks within that industry.

Of course, if you want to lead the market, not to follow it (which rarely works by the way since it is so hard to predict the future with suffucient degree of accuracy), then you need to develop a pardigm. For example, Obama's presidency will be good for infrustructure stocks. So, the pardigm is that infrustructure will become one of leading industries. Then you look at value stocks in industry , and pick KBR, for example.

RSH will be bankrupt in a couple of years. just visit one of their stores and you'll see all you need to know. It is a classic value trap.

MagicDiligence has completely wrong set of assumptions for this market and needs a make over.

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