Researching Stocks

The Cursory Review

Lynn Ostrem, VPCrow River Investment Club

www.bivio.com/crowriver

Preliminary Review

In our Nov. 2001 handout, we learned where to find good stocks.

In Dec., Jan. & Feb. we learned how to complete an SSG.

In Mar., we passed out our detailed Research Guidelines Handout.

In this lesson, we’ll work toward beginning our in-depth research.

First Things First

Complete an SSG to make sure the quality is there.

Next, go to Quicken or Multex Investor

to make a preliminary check.

We’ll use Multex Investor…here we go!

www.multexinvestor.com

First, go to the site!

Enter your Ticker…

We’ll work with this section.

Check the News And Significant Developments first!

If the News is BAD…Move on!

Need Some Examples??

ALL BAD!!

Company Overview and

Business Description

Company Overview provides a brief description……are you interested??

It also provides valuable links to a TON ofCompanyInformation!

The Business Description provides a more detailed overview...plus a bonus!

VectorVest Report

This is a free analyst report. Never use it by itself…

…only as “part” of your overall information-gathering

Officers & Directors

Who are they?

How much are they paid?

How much stock do they own?

Highlights Report

The Highlights Reportnot only gives you theNormal stuff…

…at the bottom, itgives you ownership and stock info, too!

Earnings Estimates

The first box will give you Long-TermGrowth Rates. Do they meet our goal?

Ratio Comparison

Compare your company to its industry, its sector, and the S&P!

Ready for SomeAdvanced Review??

Insider Trading

Officers receiveoptions in lieuof compensation.

Oftentimes, theysell those options.

This is not a problem.

You are looking for lots of peoplebuying or sellingfor no apparentreason!

Positive Cash Flow

•The first Sub-Total is Operating Activity or Cash From Operations! Is it positive??

•Free Cash Flow is Operating Activity minus Capital Expenditures.

•Here, $23.3M - $4.8M = $18.5M in Free Cash Flow

Accts. Receivable & Inventory

Neither should be growing faster than sales.

So what if…sales grew at 18% last quarter, butAccounts Receivable grew at 21%?Inventory grew at 30%?

The answers are…

The company isn’t collecting its money from customers in a timely manner anymore!

The company isn’t moving its products as

fast as it used to!

BOTH are RED FLAGS!!

•Sales are on the Income Statement

•Accounts Receivable is on the Balance Sheet

•Inventory is on the Balance Sheet

And if you like what you see…

…Order that Investor’s Packet early!

Questions??