19 Mar COTW: No Revenue, No Problem
- There is no hard-and-fast rule, but “story stocks” are generally defined as those trading at prices substantially out of line with current fundamentals (revenue, earnings, cash flow, etc.) as a result of a positive story that suggests larger profits down the road.
- The chart below shows the performance differential from early 2014 through February between high price-to-sales stocks and the broader market.
- We love a good story as much as the next person, but we also love investments that generate cash flow today. We believe opportunities in the latter are underappreciated relative to the former.
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