Oversold Stocks: GoPro

GoPro $GPRO missed its earnings today and the stock is in an oversold position. See snippet of Money Flow Indicator chart below. I am not a buyer of the stock but it could be a great internet equipment play for the right investor.

GoPro MFI Indicator as of 11/4/2016 9:45 AM

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Investment Word of the Day: Price-to-Cash-Flow Per Share

Here is another metric that can help you determine the value of a company: Price-to-Cash-Flow Ratio.

The price-to-cash-flow ratio is the ratio of a stock’s price to its cash flow per share. The price-to-cash-flow ratio is an indicator of a stock’s valuation. Although there is no single figure to indicate an optimal price-to-cash-flow ratio, a ratio in the low single digits may indicate the stock is undervalued, while a higher ratio may suggest potential overvaluation.

The ratio takes into consideration a stock’s operating cash flow, which adds non-cash earnings such as depreciation and amortization to net income. It is especially useful for valuing stocks that have positive cash flow but are not profitable because of large non-cash charges.

Calculated as:
Price-To-Cash-Flow Ratio =  Share Price/Cash Flow Per Share
For Example:

Both companies are in the Travel industry. Which stock is more undervalued or overvalued?


Priceline Group (PCLN) with a Price-to-Cash-Flow of $24.36 per share or

Expedia (EXPE) with a Price-to-Cash-Flow of $32.84 per share

You may leave your answer in the comments section below.

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Investment Word of the Day: Price/Book Value Ratio

Price to Book Value Ratio. A valuation ratio used by investors which compares a stock's per-share price (market value) to its book value (shareholders' equity). The price-to-book value ratio, expressed as a multiple (i.e. how many times a company's stock is trading per share compared to the company's book value per share), is an indication of how much shareholders are paying for the net assets of a company.

The book value of a company is the value of a company's assets expressed on the balance sheet. It is the difference between the balance sheet assets and balance sheet liabilities and is an estimation of the value if it were to be liquidated.

The price/book value ratio, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm.

Price to Book Value Ratio = Stock price Per Share/Shareholders equity per share

Example: What is Alphabet's, Inc. Price/Book Value Per Share:   $756.05/175.26 = 4.31

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