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Andrew T. Gillies is Director of Communications at the Center for Audit Quality, an affiliate of the American Institute of CPAs, in Washington, DC. Based in Washington since 2002, he has also worked in editorial and communications roles at the Investment Company Institute, the World Bank, Forbes, and Vault.com. His policy-themed writing has focused on aerospace and defense, energy and environment, transportation, and financial services.

Thursday, February 22, 2001

Stock Focus: Ten Stocks That Could Change The World

NEW YORK - Inktomi is one of the stocks featured in Larry Waschka's new book, Ten Stocks That Could Change the World. Foster City, Calif.-based Inktomi specializes in search software and applications for speeding up Internet traffic. Customers include high-profile names such as Yahoo! and Reuters.

Waschka surely didn't pick Inktomi (nasdaq: INKT - news - people) for its profitability. In 2000 the company lost $9 million, or 9 cents a share, and is expected to earn less than a penny a share this year.

"I don't use multiples such as P/E," says Waschka, a hedge fund manager and author of The Complete Idiot's Guide to Getting Rich and co-author of Managing Family Trusts. To value these stocks, Waschka prefers to use ratios such as price-to-tangible book value (book value excluding goodwill) and price-to-sales (price divided by trailing sales per share). In fact, based on trailing 12-month sales, Inktomi's price-to-sales ratio comes in at 6. Waschka calls a price-to-sales ratio of 10 ideal for a company that has superior growth potential.

Full story at Forbes.com