Goldman is applying the number-crunching techniques of baseball general manager Billy Beane Everett CollectionGoldman Sachs, inspired by “Moneyball,” comes up with Sabermetrics for stocks.Goldman Sachs is stealing a page out of Billy Beane’s “Moneyball” playbook. But instead of scouring the world for All-Star baseball players in the making, the investment bank is focusing on finding stocks with hidden potential, in a recent research note. The prominent investment bank is applying the number-crunching techniques (known as Sabermetrics) used by famed baseball general manager Beane, the subject of Michael Lewis’s bestselling book “Moneyball,” later made into a popular movie. Goldman’s attempt to draw parallels between the baseball world and stock picking is only fitting as the World Series begins tomorrow. Plus, stock pickers may feel as if they’ve been beaten down by a Louisville Slugger over the past week of tumultuous trading. Goldman’s research team goes as far as putting together a sort of fantasy baseball roster comprised of stocks. Here’s how it works: Goldman Sachs puts together three starting lineups of nine of their buy-rated stocks based on each of these metrics. One stock makes the cut on all three, Apple Inc. AAPL, +2.14% and three stocks make the cut on two of the lists: International Paper Co. IP, +3.71% Macy’s Inc. M, +1.53% , and Computer Sciences Corp. CSC, +0.35% Defense efficiency ratio: Free cash flow conversion The defense efficiency ratio, or DER, is a metric baseball statisticians use to calculate how often a team gets an out whenever the opposing team hits a ball into play, excluding home runs. The analogy in stock picking, according to Goldman Sachs, is free cash flow conversion, or how often a company can convert account-based earnings into cash, which can then be returned to shareholders through dividends or buybacks, or used for capital investment or M&A. Companies that fit the bill are KAR Auction Services Inc. KAR, +0.85% EMC Corp.EMC, -0.59% Wyndham Worldwide Corp . WYN, +1.00% L-3 Communications Holdings Inc. LLL, -0.98% Oracle Corp. ORCL, -0.18% International Paper, Macy’s, Amgen Inc. AMGN, +2.86% , and Apple. Value over replacement player: Cash returns on cash invested/weighted average cost of capital Just say you have a player you’re considering trading: How much is that player worth compared to a hypothetical player that can replace him? In baseball, that’s where value over replacement player, or VORP, comes into play. In stock picking, this is analogous to cash returns on cash invested (CROCI) being the player in question compared with the “replacement player” of weighted-average cost of capital, according to Goldman Sachs. Their picks include companies where CROCI is consistently three times that of the weighted-average cost of capital. Companies in this starting lineup include Gartner Inc. IT, +1.05% Facebook Inc.FB, +1.32% Mastercard Inc. MA, +0.67% Mead Johnson Nutrition Co. MJN, -3.20%Monster Beverage Corp. MNST, +3.50% Computer Sciences, Viacom Inc.VIA, -0.03% Intuitive Surgical Inc. ISRG, +3.19% and Apple. On-base percentage plus slugging: operating cash flow plus “social contract” On-base percentage plus slugging measures a player’s ability to get on base, whether by a hit or drawing a walk, plus how well he hits singles, doubles, triples, and home runs. The equivalent in stock picking is operating cash flow plus “social contract,” where cash flow yield is measured along with dividend yield and how much share buybacks boost earnings per share, according to Goldman Sachs. The roster here includes Macy’s, International Paper, Apple, Cooper Tire & Rubber Co. CTB, +0.58% Rock-Tenn Co. RKT, +2.76% Computer Sciences, Delphi Automotive PLC DLPH, +0.67% Comcast Corp. CMCSA, +1.22% , and Paccar Inc.PCAR, -0.82% The concept of using Sabermetrics employed by Beane and popularized in Lewis’s book has its critics. Some have pointed out that while it may work well in the grind of the regular season, it falls apart during the urgent clutch play required in the post-season. So in other words, this method arguably may get you to the playoffs but it likely won’t win you the World Series. Case in point, the A’s have appeared in the post season six times since 2002. Only one year in that time period, 2006, did they advance past the American League Divisional Series. By WALLACE WITKOWSKI REPORTER