Stock Valuation 3-26-2011

Being satisfied with the results of my combination screen so far, I wanted to use my criteria to calculate a valuation for many stocks to see at what price my screen would pick them up. I calculated 3 valuation based on my 3 main criteria:


Price/Sales - I want a valuation at less than 1.5 times Price/Sales. To arrive at a valuation, I multiply the revenues per share by 1.5.


Price/Book - I want to keep that criteria under 2. For this one, I multiply the book value per share by 2.


PEG - I choose stocks with a PEG under 1.5. My valuation is calculated by multiplying the long term projected growth (in percent) by the earning per share times 1.5.


In addition, I calculated an average of all 3 valuations just for fun!


I added a column to indicate if the stock was cheap or expensive relative to all criteria and the average. I published a table online that contains the valuation for over 1600 stocks. I'll try to expend it to more later. It can be viewed at this link.


Here are some sample valuations for popular and "momentum" stocks:

Not surprisingly enough, tech stock are usually expensive relative to book and sales, but cheap relative to PEG. With a PEG of 1.5 as a limit, I am overtly generous to growth. But keep in mind that the most important factor in my screen is Price to sales. And in this department, tech and "momentum" stocks fail badly! In this current list, the only stock matching the stock valuation criteria would be BAC, GE, GM, SPWRA and VZ. The last criteria in my screen is that the stock be within 95% of it's 52 week high which these stocks fail. But on a valuation basis, they might be worth a look!