Stock Selection-Fundamental Parameters
High level stock selection is performed by individuals using stock tips received on emails/watsapp/online sources. This site suggests stocks that are good based on fundamental parameters that are used by experiences investors to derive long term gains in the stock market. Some of the stocks are known to everyone like APPLE, FACEBOOK, AMAZON. We show how these companies meet a set of basic parameters and also enlist a ton of others that exhibit the same fundamental characteristics and maybe good for a look. Stock Investing using fundamental research combined with good timing i.e. buying when there is fear on the market is the sure shot way to make money in the markets.
These selection are based on the following fundamental ratios. All the underlying data is taken from EDGAR reports filed by the companies with the SEC. The excel sheets are also uploaded so that you can play around and use it to analyse any company you like.
High level decisions on buy or sell for a stock should be driven by
1. MARGIN PERFORMANCE
- The margin that the company makes. i.e. Out of $1 that the company sells how much does the company take home as savings after all the expenses.
2. GROWTH RATES
- The growth rates of the company on revenue, net income, EPS and Dividend. i.e. If it sold $1 last year how much more did it sell this year.
3. MANAGEMENT EFFICIENCY
- The efficiency ratios of the company on Equity and Assets. i.e. How well is the company able to sweat each $1 that it puts to work in the company. We also analyse the Debt to Equity ratio to ensure that the RoE is not purely due to high leverage or backed mostly by debt
All these ratios are based on the EDGAR report submitted to the SEC. All the data on the above analysis can be found at the link below
Following is a list of companies that is covered in the blog. All these companies are not worth investing in. There are both good, bad and ugly companies that are presented in this blog. The focus is to differentiate the good, bad and ugly based on the above fundamental parameters. The exercise shows that we have to focus on stocks based on the these parameters to ensure that we build a portfolio of good quality companies that would theoretical pass the test per the below quotes from Great Investors.
“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.” -Warren Buffett
“In the long-run stocks go up only for three reasons. 1. Earnings 2. Earnings 3. Earnings .” – Peter Lynch