Transcript PowerPoint - Invest Ed

Stock Selection
by Matt Ingram
Invest Ed®
All Rights Reserved
Oklahoma Securities Commission
July 2016
Shortcut to Yahoo! Finance
Research Page
http://finance.yahoo.com
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Yahoo! Finance, part 1
• Company
Profile includes Company website,
getting the basics
• Charts
We want to see where it has been;
it does not affect our buy/sell
decision, only the timing.
New high? New low?
• News & Info
Latest News/Press Releases: When
are earnings coming out? When is
the company presenting at a
conference?
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Yahoo! Finance, part 2
• Key Statistics
All the important stats
are here; but if a
number doesn’t make
sense, there is probably
a reason for it.
• Analyst Coverage
growth rates, forecasts
and opinions
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Yahoo! Finance, part 3
• Ownership
Who owns stock inside
the company, and are
they buying or selling?
• Quotes
You can download
historical prices.
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Stock Screener
• http://finviz.com/
• Click Screener.
• Click Maps.
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Descriptive Screening Filters
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Market Cap
Dividend Yield
Sector
Industry
Volume
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Fundamental Screening Factors
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ROE (return on equity)
PEG
P/E
Profit Margin
Growth
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An Example of Finviz Screener
• Let’s practice using the screener.
• Then you can do it on your own throughout
this seminar.
• And you can show students how to use it.
• Suppose I want a firm with the following
characteristics.
– dividend yield of greater than 3%
– market cap greater than $10B
– at least 15% ROE
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Stock Screener Tips
• You can sort your selections.
• You can filter your selections
even further.
• Look out for crazy numbers.
• Always verify the
numbers for your selections.
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Sources of Information
• Online: Always check the news—but which
news is really important?
• Wsj.com, Market Data, economic news
• Marketwatch.com
• Yahoo! Finance
• Company’s investor relations page
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Invest in Businesses
You Understand
• Can you explain what a company
does to a third-grader?
• Can you explain why you own a
company’s stock?
• Do you know something about the business
that Wall Street analysts might not know?
• Would you want to own this business if it
was not publicly traded?
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Learning About a Company
• Read the annual report—it’s propaganda,
but informative.
• Listen to a conference call.
• Get your hands on independent research,
from a broker, or Value Line.
(available at most libraries)
• Beware of recommendations on TV. (CNBC)
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Characteristics of Stocks
I Like to Buy
• Earnings growth—compare growth to
current P/E, so the PEG ratio matters here.
• Not owned by institutions or followed by
Wall Street
• Small firms
• Margin of safety—if things go wrong, is
there a cash or asset cushion? Think
about the worst case scenario.
• Rising dividends (if it’s a mature firm)
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Good Characteristics, cont’d.
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Niche industry (high barriers to entry)
People have to buy their products.
Uses technology to improve performance
Insiders are buying shares.
(Selling shares doesn’t always bother me.)
• Industry is out of favor (but it might be for a
reason), and the balance sheet is strong.
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Stocks to Avoid
• Beware the “next” something.
• Chat room recommendations (Avoid touts.)
• The hot stock of the moment
(Everyone is talking about it.)
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No margin for error
Lots of competition and low barriers to entry
Shaky accounting (cockroach theory)
P/E is well above growth forecasts.
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Class Activity
The Danger Zone
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Each group has a name of a stock.
Think about the risks to this business.
What could go wrong?
Look at growth rates and current
valuations (P/E or otherwise).
• Are we paying too much for the
earnings?
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