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_______
10-18-2014, 06:12 PM
Does anybody here do fundamental research into companies before investing?

If so, what criteria are you looking at to narrow the field and make your decision? Do you have particular sectors you favor?

I know most who post here are traders but I'm curious what others who have longer term horizons are looking at. I have my own set but I'm sure I also have blind spots. Would love to hear thoughts from others.

badcompany
10-18-2014, 06:39 PM
While I use price movement as my first sieve, I look at fundamentals when narrowing down the candidates for what is hopefully a long term hold.

IMO, the business itself is way more important than the financials.

Two companies can have identical income statements; yet, one could be making a product on the verge of becoming obsolete, while the other has excellent long term prospects. So, my main concern is whether I like the business.

After that, it's the standard fundamental analysis which amounts to whether the company has a history of making more and more money each year. The rest of it is all nonsense.

RaceBookJoe
10-19-2014, 06:28 PM
If you plan to invest then it makes sense to get an idea if the company. When I say invest, to be that is anything over 3 months. At the very minimum, know when the next earnings release will be. A catalyst like that can make or lose you a ton of money. Easiest sites to find stuff would be yahoo.finance or Finviz.com

_______
10-19-2014, 07:56 PM
I appreciate the responses. Amen to liking the business. I have to feel that a company wil be around in 20 years before I would even consider taking the next step in researching it. I think I'm avoiding today's dominant harness makers. I guess in 20 years I'll know for sure, lol.

In my holdings, I'm somewhat overweight Pharma (which doesn't look all that cheap) and more overweight sub sectors of Energy (which on a comparative basis is the cheapest of the 10 major sectors) because of that.

My first sieve is a modified PEG (trailing p/e divided by average analyst projected 12 month eps growth) that takes into account any dividend paid. Looking for something below 1.00 to start.

I'm really looking for how others manage the universe of equities to filter out signal from noise.

I wind up with a list of 300+ on above. Looking for a way to further refine and also would be interested in any flaws others see in using PEG as a first filter.

RaceBookJoe
10-19-2014, 09:12 PM
An easier way to get that count lower would be to do sector analysis first. Find what sectors are hot or outperforming the market and then drill down to the best companies in those best sectors. So many ways to do do research though, so find the way that best suits you in terms of temperament, amount of time available to do the research among others

badcompany
10-19-2014, 09:37 PM
An easier way to get that count lower would be to do sector analysis first. Find what sectors are hot or outperforming the market and then drill down to the best companies in those best sectors. So many ways to do do research though, so find the way that best suits you in terms of temperament, amount of time available to do the research among others


I do this, as well.

Morningstar is a good resource.

http://news.morningstar.com/stockReturns/CapWtdIndustryReturns.html

_______
10-19-2014, 10:29 PM
An easier way to get that count lower would be to do sector analysis first. Find what sectors are hot or outperforming the market and then drill down to the best companies in those best sectors. So many ways to do do research though, so find the way that best suits you in terms of temperament, amount of time available to do the research among others

I understand this but it seems like another version of momentum investing. Hot companies in hot sectors may be the way to go if you're willing to move in and out frequently.

I guess my temperament isn't skewed that way. I think I tend to look for the underrated company in the out of favor sector and am willing to wait out whatever short term trend is driving those.

ReplayRandall
10-20-2014, 12:06 AM
Excluding companies with market valuations smaller than $200 million and looking at how many of those companies were at least 20% below their 52-week high, this is what was found. Out of 3,606 qualifying stocks, 1,673 were 20% or more below their 52-week high. In other words, 46.3% of those stocks are currently in a bear market. Among small-cap stocks (those valued between $200 million and $1 billion) the percentage was even higher at 58%.....

badcompany
10-20-2014, 10:31 AM
Excluding companies with market valuations smaller than $200 million and looking at how many of those companies were at least 20% below their 52-week high, this is what was found. Out of 3,606 qualifying stocks, 1,673 were 20% or more below their 52-week high. In other words, 46.3% of those stocks are currently in a bear market. Among small-cap stocks (those valued between $200 million and $1 billion) the percentage was even higher at 58%.....

The problem I have with this type of stat is that it provides no context.

Here's a stock I own. It's up close to 100% in the last two years, but because of the recent sharp pullback it would be catagorized a bear market stock.

http://i95.photobucket.com/albums/l142/thinlizzy21/255E3061-75C0-4634-814D-9A0158CB5C33_zpsqy5czpdy.png (http://s95.photobucket.com/user/thinlizzy21/media/255E3061-75C0-4634-814D-9A0158CB5C33_zpsqy5czpdy.png.html)

ReplayRandall
10-20-2014, 10:44 AM
The problem I have with this type of stat is that it provides no context.

Here's a stock I own. It's up close to 100% in the last two years, but because of the recent sharp pullback it would be catagorized a bear market stock.

<a href="http://s95.photobucket.com/user/thinlizzy21/media/255E3061-75C0-4634-814D-9A0158CB5C33_zpsqy5czpdy.png.html" target="_blank">http://i95.photobucket.com/albums/l142/thinlizzy21/255E3061-75C0-4634-814D-9A0158CB5C33_zpsqy5czpdy.png


You are correct on all accounts and we're in total agreement. You brought up a micro point of view, and I brought up the macro.........