The chapter explores the drawbacks of using the price to sales ratio in investing and emphasizes the significance of considering cash flow and profitability. Examples from companies like Nortel Networks, Win Pack, and MedPace Holdings are used to illustrate the importance of understanding earnings multiples and free cash flow in making informed investment decisions.
What is it worth? Why?
Ricky Mulvey caught up with Motley Fool Canada’s Jim Gillies for a conversation about how retail investors can value stocks and why they have an advantage over institutional traders. They discuss:
- The difference between price and value.
- What financial metrics can and can’t tell investors.
- The valuation case for a sporting goods retailer.
Companies mentioned: AAPL, OTC: WIPKF, MEDP, ASO, DKS, ADDYY, SFM
Host: Ricky Mulvey
Guest: Jim Gillies
Engineer: Tim Sparks
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