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Super Stocks
Target the Super Stocks that deliver huge returns One of the most successful investing books ever published, Super Stocks showed investors how to use innovative techniques and fundamental analysis for valuing stocks and predicting future profit margins. You'll gain valuable insight into Fisher's original thinkin for valuing stocks and predicting future profit margins. A pioneer in the use of the Price Sales Ratio-a powerful analytical tool-Fisher regales readers with instructive tales of the businesses he invested in and profited from. Super Stocks gives a historical perspective on how Fisher successfully researched companies and stocks—who he saw and what he asked—to get a better read on profitable returns. “As rich in investment war stories as it is in knowledge.”-The Motley Fool
- GenresFinance
256 pages, Paperback
First published February 1, 1987
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Displaying 1 - 8 of 8 reviews
August 21, 2018
Some strands of value investing are relatively quantative in their focus on the replacement cost of balance sheet items etc. A growth investor invests in the unknowable future of a company. In some respects growth investing then is more of an art form where some forms of value investing are more of an applied science. This doesn’t change the fact that value investing over longer periods outperforms growth investing as growth stocks tend to be overpriced.
The key insight of this book is that growth stocks are not constantly overpriced. These rapidly expanding companies are often young and dependent on one or a few products. As products have product cycles and have to be replaced by subsequent products and this transition not always goes smoothly, there will be glitches. During these times the sales growth will slow or disappear, the company may well show losses and the stock price will nose dive like an airplane with motor failure. The trick is to figure out if the troubles are temporary or not. Ken Fishers solution is to try to find the Super Companies that are temporarily cheap and thereby also are Super Stocks.
Fisher sets up a number of qualifying criteria for companies to pass. A Super Company should have had at least 15 per cent annual top line growth on average over the last 5 years, its finances should be strong enough to survive a future 5 year worst case scenario, it should be able to generate good profit margins in a more normalized situation and preferably there should be a managerial share ownership to ensure alignments of interests with shareholders. A cornerstone of the process is then to amongst others, use P/S-ratios when looking for bargains among the potential Super Companies. This might not sound overly innovative; after all you can’t use P/E-ratios to value companies with losses. In 1984 however, P/S-ratios were practically unheard of and Fisher was a true pioneer in this respect.
After locating potential Super Stocks, a more thorough analysis must be performed to figure out the probability of the growth returning and what the normalised earnings generating ability of the company is. The book in a good way covers the vital insight that future prospective margins to a large extent depend on relative market shares and I fully agree that you probably often will find that Super Companies are those who dominate the niche they are competing in. After estimating future sales growth, normalized earnings and reasonable P/E-ratios when the company has left the glitch behind them, Fisher recommends that one should buy the stock if the price is 40 per cent lower than the valuation and only sell if the P/S-ratio becomes outrageous or if the company is starting to show signs that it’s loosing its Super Company traits.
The story line of the book follows a very logical line. Fisher locates an area of the stock market where there in theory should be plenty of bargains to be found, he sets up a process to locate the stocks that best fit this description and then designs a research process that tries to weed out the least promising investment prospects. It might sound like the most reasonable thing in the world to do but in reality most investors never arrive at such a stringent strategy during their entire career - Fisher was around 33 years old at the time of writing.
On average growth investors don’t generate market returns. This does not mean that no growth investors outperform and when a text reveals a successful growth investor’s secrets this is hugely valuable. Symptomatically, the strategy adds a healthy dose of value to the mix.
The key insight of this book is that growth stocks are not constantly overpriced. These rapidly expanding companies are often young and dependent on one or a few products. As products have product cycles and have to be replaced by subsequent products and this transition not always goes smoothly, there will be glitches. During these times the sales growth will slow or disappear, the company may well show losses and the stock price will nose dive like an airplane with motor failure. The trick is to figure out if the troubles are temporary or not. Ken Fishers solution is to try to find the Super Companies that are temporarily cheap and thereby also are Super Stocks.
Fisher sets up a number of qualifying criteria for companies to pass. A Super Company should have had at least 15 per cent annual top line growth on average over the last 5 years, its finances should be strong enough to survive a future 5 year worst case scenario, it should be able to generate good profit margins in a more normalized situation and preferably there should be a managerial share ownership to ensure alignments of interests with shareholders. A cornerstone of the process is then to amongst others, use P/S-ratios when looking for bargains among the potential Super Companies. This might not sound overly innovative; after all you can’t use P/E-ratios to value companies with losses. In 1984 however, P/S-ratios were practically unheard of and Fisher was a true pioneer in this respect.
After locating potential Super Stocks, a more thorough analysis must be performed to figure out the probability of the growth returning and what the normalised earnings generating ability of the company is. The book in a good way covers the vital insight that future prospective margins to a large extent depend on relative market shares and I fully agree that you probably often will find that Super Companies are those who dominate the niche they are competing in. After estimating future sales growth, normalized earnings and reasonable P/E-ratios when the company has left the glitch behind them, Fisher recommends that one should buy the stock if the price is 40 per cent lower than the valuation and only sell if the P/S-ratio becomes outrageous or if the company is starting to show signs that it’s loosing its Super Company traits.
The story line of the book follows a very logical line. Fisher locates an area of the stock market where there in theory should be plenty of bargains to be found, he sets up a process to locate the stocks that best fit this description and then designs a research process that tries to weed out the least promising investment prospects. It might sound like the most reasonable thing in the world to do but in reality most investors never arrive at such a stringent strategy during their entire career - Fisher was around 33 years old at the time of writing.
On average growth investors don’t generate market returns. This does not mean that no growth investors outperform and when a text reveals a successful growth investor’s secrets this is hugely valuable. Symptomatically, the strategy adds a healthy dose of value to the mix.
July 18, 2016
Largely about buying companies when they falter and the market over-reacts
And
About Price to Sales ratios and other odd metrics that has helped out Fisher's investment firms.
The book was written based on the 70s, and it seems that there was a go-go period in tech stocks at that time.
Very poor book for serious investors.
And
About Price to Sales ratios and other odd metrics that has helped out Fisher's investment firms.
The book was written based on the 70s, and it seems that there was a go-go period in tech stocks at that time.
Very poor book for serious investors.
October 23, 2022
PSR (price:sales) and Price to research ratio were the only variables here. The fundamentals otherwise are non-existent. One up on Wallstreet is strictly better than this book. The author sounds like they made 2 good calls and brags about it for eternity.
Even PSR and PRR I don't think are all that relevant anymore. The general rule is if there is a rule that has an edge, algos are going to completely suck out that edge very quickly. I don't think you can learn anything about trading from this book tbh.
Even PSR and PRR I don't think are all that relevant anymore. The general rule is if there is a rule that has an edge, algos are going to completely suck out that edge very quickly. I don't think you can learn anything about trading from this book tbh.
September 13, 2022
It's hard to understand but its worth it.
June 11, 2010
This is one of the titles that I wish I had caught when I was much, much younger. Not that 28 is a bad age to be reading this book. But looking back, so much more could have been done back then with the excellent analytical tools that Ken Fisher espouses in this outright investment classic.
Super Stocks has been slightly revised from its 1984 edition, though not much has been changed in terms of contents.
While the world was obsessed with cliché indicators such as the Price to Earnings (P/E) Ratio, Ken Fisher is the rebel who first defined and pioneered the technique of using the Price to Sales Ratio (PSR) and Price to Research Ration (PRR) as primary forecasting tools. The technique has been remarkably accurate as you will see in the clearly given examples.
Besides the discussion on numbers, Super Stocks takes a look Fisher’s forays into the technology stocks of the 1980s. The details on how he managed to get in right at the bottom of Stellar companies like Verbatim makes for a very compelling read.
Super Stocks has been slightly revised from its 1984 edition, though not much has been changed in terms of contents.
While the world was obsessed with cliché indicators such as the Price to Earnings (P/E) Ratio, Ken Fisher is the rebel who first defined and pioneered the technique of using the Price to Sales Ratio (PSR) and Price to Research Ration (PRR) as primary forecasting tools. The technique has been remarkably accurate as you will see in the clearly given examples.
Besides the discussion on numbers, Super Stocks takes a look Fisher’s forays into the technology stocks of the 1980s. The details on how he managed to get in right at the bottom of Stellar companies like Verbatim makes for a very compelling read.
August 20, 2014
Book is written quite well for easy reading. I would recommend it to any new investors that want to learn the basics of fundamental analysis.
Pros:
easy language
focuses on simple ratios
translatable to practice
offers some useful tips not found elsewhere
Cons:
Rehash of Benjamin Graham/Warren Buffets value investing
Does not account for macroeconomic changes
May have confirmation bias
Pros:
easy language
focuses on simple ratios
translatable to practice
offers some useful tips not found elsewhere
Cons:
Rehash of Benjamin Graham/Warren Buffets value investing
Does not account for macroeconomic changes
May have confirmation bias
December 22, 2014
켄 피셔의 저서를 읽을 때마다 드는 생각이 자의적이고, 임의적인 기준 설정과 그에 따라 끼워맞춘 듯한 데이터이다. 항상 기발한 역발상의 투자기법을 떠올리는 그의 노력과 이 책이 쓰이던 시절에는 널리 쓰이지 않았던 PSR 개념을 강조한 것에는 높은 점수를 주고 싶지만, 아쉬운 것이 사실이다. PSR이라는 지표의 정량적인, 혹은 기술적인 활용보다는 매출과 이익이 턴어라운드하는 것에 대해서 고민을 해본다면 이 책에서도 많은 지혜를 얻을 수 있을 것 같다.
August 1, 2008
This is a pretty good read. As an alternative to Common Stocks, Uncommon Profits, (if you can't find it like me) then this is the next best book to read on growth investing.
Displaying 1 - 8 of 8 reviews