Value inv. How to pick

[notluck]

How does one go about narrowing the field of stocks down to a reasonable number. Does one pick an industry and then find the best value? Or do you come up with some basic ideas of X market cap, with P/E of x, with dividend of X ect. I want to read I want to analyze stocks, but I get bogged down with the the number of equities out there.

Any advice is much appreciated.

[PRE]

screener

[notluck]

Which stats does one pick? A cheap stock can have a 30 p/e ratio and expensive stock can have a 10 p/e ratio. Granted it is unlikely for 50> p/e to be "cheap", but even if you limit it to 25 p/e your left with thousands of stocks. Remove micro caps and illiquid (which some here invest profitably) you are still left with hundreds. How do you continue to limit down to 20 or 30 stocks? Or is hundreds the best one can do?

[ahnuld]

start reading. hundreds sounds like you narrowed it down pretty far.

[DesertCat]

Read a lot. Use a screener that can focus on your market caps of choice. Sorry, but it's tedious. Read 52 week low lists and look for companies that are there unfairly.

I like MSN's screener, and it also presents basic company data such as book value, ROE, earnings, recent financial statement summaries just a click a way. It makes it easy to look at a business and say "no thanks" and quickly move to the next one. The risk of course is, that often you find value by reading a companie's financial report and seeing something that pops out at you, a hidden asset, or rapidly improving business hidden in side other businesses, etc.

That's why Buffett reads everyones annual reports. He's got a huge database in his head of crappy businesses and interesting opportunities.

If I could focus on reading the annual reports for every microcap I probably should...

[notluck]

Thanks DesertCat. Do you screen by P/Es? What other items do you use to limit your investment decisions? I know you deal with micro caps so your screening techniques will reflect that.

[DesertCat]

[ QUOTE ]
Thanks DesertCat. Do you screen by P/Es? What other items do you use to limit your investment decisions? I know you deal with micro caps so your screening techniques will reflect that.

[/ QUOTE ]

I'd like to screen by free cash flow (usually earnings + depreciation/amortization - minimum capital investments), but it's hard to get a free screener that can do that.

Screening by book value I would screen by tangible book value.

But your easiest approach is just 52 week low lists. Gives you a wide variety of companies, and typically when they are attractively priced. Once you find an interesting business, you should read all of it's competitors reports, sometimes you'll find a much better opportunity, but even if you don't it's good for competitive analysis.

[ArturiusX]

I was about to suggest the 52 week low list. The 52 week high list is nice for momentum plays too.

[stephenNUTS]

[ QUOTE ]
start reading. hundreds sounds like you narrowed it down pretty far.

[/ QUOTE ]

There are SO many type simple type screeners that most online brokers supply with their order entry software....and their are also NUMEROUS FREE sites on the net as well

Papers like the WSJ or Investors Business Daily have plenty of these stats also( even though they will not be in real time)

But some BASIC stockscreen choices are (and I will discuss my favorites,if you have a specific question about each)....so just ask:

1. Stocks making new 52 week HIGHS/LOWS

2. Largest volume LEADERS(the same usual suspects each day.... stocks with LARGEST volumn percentage changes +/-(much more important IMO)and stocks with LARGEST percentage PRICE gains/losses...ALL in real time

3. Sector leaders/performers..and they can be broken down into many sub-groups ...... in other words if you just say computers...there is software ,(MSFT,Oracle,etc) storage (EMC,Emulex,etc), box makers (Dell,HP,etc) chipmakers(INTC,AMD,etc) ...and so on and so on.As you get more experienced you will know/remember most stocks,sectors,and their respective symbols easily

4.Pre-market gainers/losers

5.Post market gainers/losers

6.Stocks w/REAL TIME news releases... such as EPS,takeover talk,management changes,SEC issues,etc

7.Large Short interest screeners(these figures are usually updated on a monthly basis)

8.Stocks breaking "common" technical support levels 50dma,200dma

.....and on and on,

Take a look at this FREE stock scan software below that will give you an idea of alot of ideas regarding stock screening.Just hit the SCAN feature on the left hand side.I used this WAAY back when ,and I just looked it up and it is STILL going with some new feature as well!

http://stockcharts.com/def/servlet/SC.scan

This is just a START....but it gives you a good idea of how many things are available each day to assist you.Learning how to use,understand,and interpret them when using them for any particular trade/investment........is critical though IMO

GL,
Stephen [img]/images/graemlins/cool.gif[/img]

*** IMO most of these screeners/indicators are for technical analysis,but there are MANY such as news releases,EPS,balance sheet specific info,product developements/ideas ...that are more fundamental and used for value type decisions/analysis

[midas]

I like screening first for companies with an EV of less than $500 million, an an EV/EBITDA of less than 8x and flat to growing EBITDA. This generally yields companies that are undervalued and likely to go private.

If you have access to a online service like CapitalIQ ($$$)this screen can be done in 2 minutes.