Separately, the independent trader and blogger Brian Johnson late last month built a complex "stock screen" designed to find high-value companies, including criteria such as a price-to-cash-flow ratio
of less than 10, a price-to-sales ratio of less than one and a price-to-book ratio of less than two.
The price-to-cash-flow ratio is a particularly valuable tool when earnings are not a good indicator of value--as is the case with most technology funds or funds that specialize in other industries where companies typically have large up-front expenses.
These include the price-to-earnings ratio, the fund's overall holdings, the price-to-book ratio and the price-to-cash-flow ratio.
On the other hand, growth investors specialize in hot or emerging markets and companies with high P/E, price-to-book and price-to-cash-flow ratios.
Typically, these stocks have high P/E ratios, high price-to-book ratios and high price-to-cash-flow ratios as well as extremely high growth rates.