Issue 11 of Stock Selection Criteria
High Five!!! You made it till the end! If you’re reading this - I want to thank you and congratulate you for being an action taker! Not everyone finishes what they start out to do!
To summarise - in this course we learned how to find stocks that are in our circle of competence, determine its moats and risks, look at its profitability, its ability to pay its bills (current ratio) and determine whether it has increased its amount of cash in the bank. Then we discussed how to use the P/E ratio and dividend yield to determine whether the current price of the stock is attractive or not. A ninja tactic is doing a quick google search on the stock which may reveal some insights that we may not have found elsewhere.
With that, you now have enough knowledge to start using a stock screener to short list stocks. You can do so on the financial times website and click on “Or use the equity screener.” Then choose your country and a few sectors within your circle of competence. Then go to equity attributes and select “add or change criteria.”
Next, click on “Balance Sheet” and then click on “Current Ratio.”
Then, click on “Margins” and choose “Net Profit Margin.”
Personally, I like to specify a current ratio of at least 1.5 (left box). I would leave the box on the right empty since the higher the current ratio, the better so I do not want to filter our stocks that have a very high ratio. Under net profit margin, I like to specify a margin of at least 20% (left box).
Then click on “Go” to see the results.
Give this a try and see what you get!
With that, I want to thank you once again for taking this course. I hope you have benefited from it. If you did, and would like the cheat sheet I use to select stocks, please visit this Facebook Page.
1) Hit “Like” on the page
2) Share the pinned post (the first post you see) and
3) Leave a comment on the pinned post saying what you found most useful about this course.
This will be my cue to send you the cheat sheet to your Facebook inbox.
If you would like to learn more about investing, please take this 1-question survey (won’t take more than 30 seconds) to let me know what other topics you would like to learn about.
Lastly, I believe a word of caution is in order. What we have learned in this course is a general framework for selecting stocks. As you learn more, there can be more criteria that can be added. Most importantly, depending on the stock you are looking at, there can be some special factors to look out for that apply only to those kind of companies. For instance, if you’re looking at companies that produce commodities such as gold or oil, there are special factors to look out for such as how much of gold or oil do they own, what is their cost of production compared to competitors etc… Practice on a simulator and seeking guidance before investing is always a great idea.
I guess this is it then. I hate good-byes so I’m going to say I hope to see you in the Facebook Group where we can continue to interact and learn from each other.
I wish you all the very best! Please let me know if I can be of any help! If you'd like a quick 10 min chat with me, click here.
Legally Required Disclaimer: All information provided is solely for education and is not a recommendation or advise to invest. The course provider will not be liable for any losses, financial or otherwise incurred. This course will contain examples of several stocks in order to enhance the learning experience. No recommendation or advise to invest in these stocks is intended. Every step has been taken to ensure accuracy of the information but not assurances of the accuracy are made and the author will not be responsible for any inaccuracies. Investors may wish to seek professional guidance before investing.