Fire Your Stock Analyst! Analyzing Stocks On Your Own

by Domash, Harry

• ISBN13: 9780137010233
• ISBN10: 0137010230
• Edition: 2nd
• Format: Paperback
• Copyright: 2009-11-05
• Publisher: Ft Pr

Summary

When it comes to choosing winning stocks, there's simply no substitute for understanding the company: its strengths, weaknesses, business model, growth prospects, and true financial results. You could rely on Wall Street analysts to do this analysis for you, if you trusted them! Fortunately, there's a better alternative: do it yourself. Sounds too difficult or time-consuming? Not anymore! MSN Money columnist Harry Domash has identified shortcuts that streamline the entire research process, helping you consistently uncover the companies that offer the best prospects for stock growth and stocks to avoid like the plague. You'll find these powerful new shortcuts in only one place: the newest edition of the best-selling stock-picker's guide,Fire Your Stock Analyst. Domash reveals how to quickly assess every issue that drives stock performance, on and off the balance sheet. He presents step-by-step strategies for both value and growth-oriented investors, new examples drawn from today's markets, and a completely updated set of tools and free online resources. Along the way, Domash makes advanced analysis easier than it's ever been, presents new ways of quantifying stock risk, and covers issues most books simply ignore, including how to set your own target prices, and most important, when to sell.

Author Biography

Harry Domash is best known for his investing tutorial columns that have appeared regularly in print publications such as Business 2.0 Magazine, the San Francisco Chronicle and other newspapers, and on numerous Web sites including MSN Money and Morningstar.

He publishes DividendDetective.com, a site specializing in high-dividend investing, and WinningInvesting.com, a free site featuring “how-to” investing tutorials and other resources. Domash conducts fundamental analysis workshops and is a frequent speaker at Money Show investing seminars in Las Vegas, San Francisco, and at the American Association of Individual Investors’ meetings. His books include The Everything Online Investing Book: How to Use the Internet to Analyze Stocks and Mutual Funds.

Table of Contents

Acknowledgments	p. xiii
About the Author	p. xxii
Introduction	p. xxiii
Getting Started	p. 1
The Analysis Process	p. 3
Identifying Potential Candidates	p. 3
Concentrate on the Strongest Candidates	p. 4
Quick Prequalify	p. 4
Detailed Analysis	p. 6
When to Sell	p. 10
Summary	p. 10
Evaluating Risk	p. 11
Portfolio Risk	p. 11
Risk Factors	p. 12
Spotting Strong Industries in a Weak Market	p. 16
Company-Specific Risks	p. 17
Company-Specific Risks Described in Subsequent Chapters	p. 20
Summary	p. 23
Screening	p. 25
Morningstar	p. 26
Google	p. 26
Zacks	p. 27
Portfoliol23	p. 27
Google Growth Screen	p. 28
Zacks Growth/Momentum Screen	p. 31
Portfolio 123 Down & Out Value Stock Finder	p. 34
Portfolio 123 Growth Stock Screen	p. 38
Zacks' Bulletproof Stocks	p. 41
The Zen of Screening	p. 44
Premade Screens	p. 44
Summary	p. 45
Analysis Tools	p. 47
Analysis Tool #1: Analyze Analysts' Data	p. 49
Who are the Analysts?	p. 50
Analysts' Ratings	p. 51
"Sell" is a Four-Letter Word	p. 51
Consensus Ratings	p. 53
Do Strong Buys Outperform Sells?	p. 54
Number of Analysts	p. 58
Sentiment Index	p. 59
Analysts' Estimates	p. 61
Earnings Surprise	p. 66
Sales Forecasts	p. 67
Guidance Changes	p. 69
Research Reports	p. 69
Summary	p. 70
Analysis Tool #2: Valuation	p. 71
Implied Growth	p. 72
Growth at a Reasonable Price	p. 76
Dividends	p. 80
Summary	p. 80
Analysis Tool #3: Establish Target Prices	p. 81
The Process	p. 82
Summary	p. 90
Analysis Tool. #4: Industry Analysis	p. 91
The Business	p. 91
Industiy Growth Outlook	p. 92
Analysts' Forecasts are Good Enough	p. 93
Convert Earnings Growth to Sales Growth	p. 93
Industry Concentration	p. 96
Picking Winners in an Emerging Fragmented Industry	p. 97
Industry Scuttlebutt	p. 101
Summary	p. 102
Analysis Tool #5: Business Plan Analysis	p. 103
Introduction	p. 104
Overblown Competitive Advantages: Factors That Should Make a Difference but Often Don't	p. 113
Business Plan Scorecard	p. 115
Summary	p. 115
Analysis Tool #6: Evaluate Management Quality	p. 117
Key Executive and Board Quality	p. 117
Clean Accounting	p. 118
Earnings Growth Stability	p. 120
Stock Ownership	p. 122
Summary	p. 122
Analysis Tool #7: Analyze Financial Fitness	p. 123
Financial Fitness Counts	p. 123
Pinpointing Financially Challenged Companies	p. 124
Simplify the Problem	p. 125
Detecting Potential Busted Cash Burners	p. 127
Detailed Fiscal Fitness Exam	p. 136
Bond Ratings	p. 150
Use Bond Prices to Identify Risky Debtors	p. 152
Summary	p. 153
Analysis Tool #8: Profitability and Growth Analysis	p. 155
Where Do Earnings Come From?	p. 155
Analyzing Sales (Revenue) History	p. 161
Analyzing Margins	p. 166
Comparing Margins	p. 167
High Versus Low Margins	p. 172
Analyzing Overhead Expenses	p. 174
Profitability Ratios	p. 175
Cash Flow Analysis	p. 182
EBITDA Versus Operating Cash Flow	p. 189
Summary	p. 190
Analysis Tool #9: Detect Red Flags	p. 191
Sales Growth Trends	p. 193
Accounts Receivables and Inventories	p. 197
Statement of Cash Flows	p. 204
Yellow Flags	p. 209
Summary	p. 212
Analysis Tool #10: Ownership Considerations	p. 215
Institutional Ownership	p. 215
Insider Ownership	p. 218
Summary	p. 221
Analysis Tool #11: Price Charts	p. 223
Trends	p. 223
Moving Averages	p. 225
Value Investors	p. 225
Growth Investors	p. 226
Avoid Downtrends	p. 227
Compare Short- and Long-Term Moving Averages	p. 227
The Risk Zone	p. 228
Chart Types	p. 229
Trading Volume	p. 230
Summary	p. 230
The Analysis Process	p. 231
Quick Prequalify	p. 233
Concentrate on the Strongest Candidates	p. 233
Company Overview	p. 234
Valuation Ratios	p. 238
Real Revenues + Real Earnings + Real Growth = Real Stock	p. 241
Check the Buzz	p. 243
Summary	p. 244
The Value Investing Process	p. 245
Concentrate on the Strongest Candidates	p. 245
Cycles	p. 247
Normalizing	p. 248
The Valie Analysis Process	p. 248
When to Sell	p. 271
Summary	p. 273
The Growth Investing Process	p. 275
Concentrate on the Strongest Candidates	p. 275
Growth Candidates	p. 278
The Process	p. 278
When to Sell	p. 315
Summary	p. 317
Analysis Scorecards	p. 319
Value Stock Analysis Scorecard	p. 320
Growth Stock Analysis Scorecard	p. 326
Appendixes	p. 333
Industry Information	p. 335
Economic Data	p. 341
Earnings Reports and Conference Calls	p. 343
Reported Earnings	p. 344
Summary	p. 346
Detecting Scams, Frauds, and Pump and Dump	p. 347
Summary	p. 350
How to Read Financial Statements	p. 351
Income Statement	p. 352
Balance Sheet	p. 353
Statement of Cash Flows	p. 355
Finding the Data	p. 357
Pro Forma Accounting Versus GAAP	p. 358
Glossary	p. 359
Index	p. 367
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