I heard the sad news last night that legendary Phillies broadcast announcer Harry Kalas passed unexpectedly yesterday as he was getting ready to do what he loved best: Call a game. Harry was a great guy and a terrific broadcaster. They don't make them any better.
Harry will be missed by the team, the fans and myself. He's been a mainstay at Phillies games since 1971. That's quite a track record for anyone.
The track record for my deep-in-the-money options trading system is now 100-1, with Monday's $1,000 win on Alcoa (AA). To pick winning stocks, I use a lot of measures to judge whether shares are truly value-priced.
The most important metric I use is the price-to-earnings ratio. But another measure that clarifies the relationship of a stock's going price to its profitability is price-to-cash flow.Earnings per share numbers -- particularly the ones excluding special charges -- can be smoothed by management from quarter to quarter. To counter that, investors can use the P/CF ratio to verify that a stock is a true value name. You can look up the P/CF ratio for stocks on various financial services sites, or calculate it yourself. I get P/CF by dividing the stock's market cap by last year's operating cash flow numbers, which are found in the company's most recent cash flow statements. Let's look at the ratios for a few companies to get a handle on the variation in P/CF ranges. We'll start with a value-oriented stock. On Monday, my pick for my DITM system was Noble Corp. (NE), an oil-services company whose price has been pummeled despite expectations of profit growth this year. I liked Noble's return on equity (32.5%), price-to-earnings-to-growth ratio (0.48), and low PE (4.2) compared to its competitors.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV