Forum Archive Index - September 2003

["Cristine Kerr" <criskerr@optusnet.com.au>]

Phaedrus,

 

Thanks for this. Will check out http://investor.ninemsn.com.au/investor/Shares/finder/default.asp I have been manually analysing.

 

I'm a little hesitant about the following because of possible responses to this post, however; I've posted so much about sharing information I believe I am obliged to bare so here's a rough outline:

 

Stock leads: Anywhere, I also track ASX announcements, most traded stocks by volume, price, industry, etc then follow each lead by applying some or all of the following:

 

1) Market analysis from my own knowledge base and thorny experiences because it's not possible to commission market analysis on every stock purchase.

 

2) Business Analysis: I believe I mentioned I read - a lot. That's because I analyse all sources of information such as company notices, financial reports, websites, news, company brochures, test responses to emails, test responses to phone calls, etc, etc. I am looking for sound planning and reporting, key milestones for start-ups, customer charters and evidence of high levels of customer satisfaction, innovation, cash flow and where it has originated from, assets and their potential, borrowings, sufficient cash to cover future operating costs, payment of dividends, etc. If possible, I also like to get a feel for the company profile and values (good will, fair dealing, corporate conscience). This tells me if they're a stayer. How do people talk or write about the company? Are the management confident, competent, open and experienced? Does management have have an appreciation rather than arrogance for shareholders? Is the company willing to disclose the good and bad (not trying to hide, gloss-over, or cover up things) because they have sound plans and strategies to turn things around? (If I had access to additional sources of information - as mentioned by other posters - I too would be noticing the absence of Starbuck's coffee containers in the rubbish, and speaking with company truck drivers.)

 

3) Price Analysis: What is the current share price? How does this compare historically? If the price has been higher, what factors caused it and are they likely to recur in the near future? Is the price over or under similar companies? Price to earnings? Is the stock undervalued for its potential? etc

 

The above provides a basis for a value equation. Essentially, I weigh the good against the bad, benefits against costs, etc.

 

What I'm looking for is good stock with good potential that is preferably way undervalued by the market.

 

Some factors are very important to me. For example; I recently sold out of GRR for a very small gain because of the way they were managing a takeover (which incidentally didn't eventuate).

Kind regards,

Cris

----- Original Message -----

From: Phaedrus

To: Sharechat@sharechat.co.nz

Sent: Friday, September 26, 2003 5:16 PM

Subject: [sharechat] FA/TA

T100,
     Screening stock fundamentals manually is fine in the NZ market, but as you point out, this is impractical for Australian stocks. In the USA, manually vetting over 10,000 stocks is an impossibility.  The utility that you need is a stock screener. Most on-line brokers have something, though often they provide very few screening parameters. You were, in fact, very close to quite a good screener when you gave that ninemsn URL. Go to:-http://investor.ninemsn.com.au/investor/Shares/finder/default.asp

This screener (they call it an "Investment Finder") has over 120 screening criteria. You need to be a member to access its full functionality, but it is free to register. They have some pre-defined searches all set up to give you some idea of how to create your own advanced searches. For example, a number of their highly ranked value stocks are companies that have had poor returns but have strong growth forecasts.  This query returns all companies with a high Value Rank, with negative total returns in the last year and with a two year forecast growth above 20%. Another standard screen focuses on stocks with a strong growth track record. These are top value stocks with EPS growth over the last five years above 15% and forecast growth above 20%. Another standard screen lists all stocks with a PE less than 10 and a PEG less than 1. You will develop your own preferences - for example, I like to incorporate the Price/Sales ratio where I can.
 As part of my screens, I filter out companies that I consider too small or too illiquid. I find it best not to make the screening criteria too rigorous and aim for a page of selected stocks, say about 50 or so. It is very fast and very easy to visually screen the charts of this number of stocks, from which I create a short list of trading candidates.
 I had a chuckle when you said "..... my bigger losers tend to be companies with poorer fundamentals".  My biggest losers are trades where I fail to implement a stop-loss!

                           Phaedrus.


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