· Beta between
.5 and 1 on average is good.
· A correlation greater
than 0.8 is generally described as strong, whereas a correlation less
than 0.5 is generally described as weak.
· MACD histogram
is below the zero line and begins to
converge towards the zero line stock price is increasing.
When the MACD (blue line) falls below the signal line (red line) it
is a bearish signal, which indicates that it may be time to sell. Conversely,
when the MACD rises above the signal line, the indicator gives a bullish signal,
which suggests that the price of the asset is likely to experience upward
momentum.
· Checking cash
flow from financing. If it is high than also it’s not a good sign, as company is not growing
instead is using OPM.
· Adequate size of
the company:
Annual Sales > $100 million for Industrial
Company.
Annual Sales > $50 million for Public
Utility.
· Financial
Condition:
Quick and Current Ratio > 1
Debt / Equity < 1
· Dividends
Best record if dividends are not suspended in
last 10 yrs.
· Earnings Growth-
A minimum increase of at least one-third in
EPS in the past 10yrs using 3 yrs. Average at the beginning and end.
· Price
Price should not be more than 20 times the
average EPS of last 3yrs.
· P/E ratio * P/B
ratio < 22.5.
·
ROIC (Return on Invested Capital) = Owner Earnings / Invested Capital
Should be at least 10%and even 6% or 7% is
good if company has good brand names.
Where:
Owner Earning = Operating Profit +
Depreciation + Amortization of Goodwill – Federal Income Tax – Cost of Stock
Options – Capital Expenditure – Income generated on unsustainable rates of
return on pension funds.
Invested Capital = Total Assets – Cash + Past
Accounting Charges that reduced invested capital.
· Calculating stock
value for aggressive investors-
NWC = CA – CL.
NNC = NWC – Long term Liabilities.
Advised price to buy stock = 66% of NNC /
Total shares Outstanding.
· Minimum of 50,000
shares daily trading.
·
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