Fire Your Stock Analyst!: Analyzing Stocks On Your Own

Overview

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 ...
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Overview

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.
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What People Are Saying

Gerber
Fire Your Stock Analyst! grabbed my attention early and held it to the very end. This is a good book if you are interested in being your own stock guru or just getting started in common stock investment analysis.
— Portfolio Manager, Ameristock Funds
Mulford
A refreshing antidote to run-of-the-mill investing 'how tos.' In Fire Your Stock Analyst!, Harry Domash combines the wisdom of many of the nation's top money managers with his own earthly style of stock picking. The net result is an insightful and useful treatise on investing that works for both growth and value plays.
— Invesco Chair and Professor of Accounting, Georgia Institute of Technology, and co-author of The Financial Numbers Game: Detecting Creative Accounting Practices
Victor Niederhoffer
This is a thoughtful book that will stir the imagination and whet the appetite of anyone considering investing in stocks. It will serve as a foundation for lifelong education in how to improve your wealth and your understanding of financial statements.
— Chief Speculator, Manchester Investments, and author of the bestselling Education of a Speculator
Jon D. Markman
Fire Your Stock Analyst! provides well thought out, sensible, step-by-step strategies for analyzing stocks, including when to sell. These analytical methods, used by pros though rarely explained to individual investors, will help you improve your results in the market right away.
— Managing Editor, CNBC on MSN Money
David Edwards
Just finished reading Fire Your Stock Analyst! and I must say I'm delighted-it's sensible, balances risks with rewards, has a lot of real-world practical examples carefully worked out, and a lot of tangible parameters (e.g. the "Quick-Hype Checks"). This is the book I wish I had time to write.
— President, Heron Capital Management, Inc.
Richard Driehaus
Fire Your Stock Analyst! is a must-read for novice and expert investors alike, offering honest and up-to-the minute advice on topics such as accounting fraud, and guidance on the investment-research process. Harry Domash offers up a great combination of textbook knowledge backed by real-world examples.
— Driehaus Capital Management, Inc.
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Product Details

  • ISBN-13: 9780137010233
  • Publisher: FT Press
  • Publication date: 11/19/2009
  • Edition description: Updated
  • Edition number: 2
  • Pages: 385
  • Sales rank: 412,181
  • Product dimensions: 5.90 (w) x 8.90 (h) x 1.00 (d)

Meet the Author

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.

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Read an Excerpt

Introduction

"Not everything that can be counted counts, and not everything that counts can be counted."

—Albert Einstein

This is a book about analyzing stocks.

The process of writing this book turned out to be a huge educational experience for me. I thought that I knew something about the subject when I started. After all, I'd been teaching it, writing about it, and doing it for years.

I had pored over scores of investing how-to books by famous and not so famous gurus and studied their teachings. I meticulously researched how I would have fared if I had followed their strategies in the past. Based on their work, I synthesized and tested my own strategies.

In the process of researching this book I interviewed 15 professional money managers and market analysts. I had never met any of them when I started. I found some because they managed best-in-class mutual funds with solid long-term market-beating performance records. Others were market analysts or private money managers practicing innovative strategies that I'd heard about from other professionals or through their own writings. About half of those I contacted graciously agreed to talk to me.

In truth, I may have misled them. They probably thought I was writing one of those books that features a single guru per chapter, a sort of minibiography describing their childhood, working style, office environment, as well as their investing methods.

I didn't do any of that. I focused our conversations on just three areas: (1) how do they identify investment candidates, (2) how do they analyze them, and (3) how do they decide when tosell.

I had interviewed money managers before, but not at that level, and not in this context. It was an on-the-job learning experience, and I flubbed the first couple, in terms of asking the right questions. But after a while, I got the hang of it.

Interviewing a money manager is a lot different from reading a book they've written, or hearing them speak. For starters, you don't have to go over the same ground if you've already read their works, or heard descriptions of their methods. Instead, you can zero in on the details, asking questions like: How do you define overvalued? How do you identify good management? How do you pinpoint an industry's strongest player? What are your sell signals?

Often the conversations took me to unexpected places. For instance, I was unaware of Porter's Five Forces Model before Nicholas Gerber gently brought it to my attention (by the time Ken Shea mentioned it a week or so later, I responded as though it were old hat). The Porter model inspired the business plan evaluation strategy that became Tool #5.

Some interviews led me to academic research that I'd always assumed was just too, well, academic, to be of interest. That's how I discovered the work of University of Chicago Business School professor Joseph Piotroski, whose research inspired the fiscal health exam featured in Chapter 10.

Perhaps my biggest surprise concerned value investing. I could never figure it out before. I'd read the books packed with data proving that low P/E stocks outperform glamour stocks, but I could never make it work. The turkey's P/Es just kept getting lower after I bought them. After interviewing several money managers, it hit me that what they did bore little resemblance to what I'd read about value investing. They weren't buying low P/E stocks. They were buying great companies that had stumbled! There's a world of difference between those two approaches.

The wealth of information that these market experts and researchers so kindly shared with me forms the basis for what follows. But being an ungrateful sort, I didn't give them their deserved recognition by describing each of their strategies separately. Rather, I distilled them into the combined analysis tools and strategies that make up this book.

Who Should Read this Book

This is not a get-rich-easy kind of book. There are no magic formulas revealed. I wrote it for people who know that making money in the stock market takes more than running a screen or watching CNBC. I wrote this book for investors willing to put in the time and effort it takes to find and research profitable stock investments.

What's in this Book

I've read many investing books filled with great concepts and strategies that left me feeling unfulfilled, because they didn't tell me how to put those wonderful ideas into practice. This book describes practical step-by-step strategies for finding, researching, and evaluating investment candidates. Equally important, it also tells you when to sell.

I describe two step-by-step strategies, one for growth stocks, and the other for value investors. Some experts advise that both are, in fact, similar strategies. While it's true that you can have a value-priced growth stock, the two analyses processes are very different. When value investors are selling, growth investors are buying. So it's unlikely that the value and growth investors would own the same stock at the same time. While the two strategies are different, they draw on a common set of analysis tools.

What's Different?

This isn't a rehash of conventional wisdom and familiar strategies. The methods described make use of information readily available to anyone connected to the Internet, but in new ways, including:

How to Gauge the Risk of Owning a Specific Stock

In the past, investors hrelied mostly on past performance to determine the risk of owning a stock. But in the end, stocks move in response to changes in a company's earnings prospects. A price chart shows you history; analyzing fundamentals can help you see the future. You'll discover how to use those fundamentals to evaluate the risks specific to each stock.

Analyzing the Analysts

Recent events demonstrate that you can't depend on analysts' recommendations to make money in the market. But there's still much to be learned from their ratings and forecasts.

What a Stock's Valuation Tells You

Knowing the expectations implied in a stock's valuation tells you much about the rewards versus risks of owning the stock.

How to Set Target Prices

Something that the pros always do, but nobody ever told you.

Industry Analysis

Has your candidate picked a market worth pursuing? If so, are you riding the winning horse?

Business Plan Analysis

Is your candidate more like Wal-Mart or Kmart? Analyzing its business plan will help you find out.

Financial Fitness Evaluator

Bankruptcies are bad news for stockholders, but nobody ever told you how to find out if your stock is a bankruptcy candidate.

How to Use Sale Forecasts

Analysts' consensus sales forecasts have only recently become available. Here's how to use them to identify companies likely to come up short at earnings report time.

Analyze Profitability

Profitability is more than earnings per share. Here's how to find out if your candidate is really making money.

Detect Accounting Shenanigans

Some executives will do whatever it takes to meet earnings forecasts. Here's how to find out if they're cooking the books to do it.

When to Sell

Specific rules for selling, depending on whether you're a growth or value investor.

Notes on Examples

Most of the examples used to illustrate the recommended analyses strategies draw on data that was available on a particular historical date. However, many of the strategies developed out of interviews and research conducted specifically for the book. Consequently, the examples demonstrate what could have been done, but not necessarily what I did on those dates.

Many examples compare annual operating characteristics of firms that have different fiscal year-end dates. For the sake of clarity, I used the closest calendar year for the comparisons. For instance, if one company's fiscal year ended November 30, 1999, and another on January 31, 2000, I labeled the annual data for both as calendar year 1999. So while the figures shown may be technically inaccurate, they're close enough to support the point made by the examples.

Accounting Shortcuts

Certain accounting formulas such as return on assets call for determining the average asset totals over the course of a year. Instead, I use the year-end figures because you can pick them directly off of the balance sheet instead of having to calculate them. Consistently applying such shortcuts simplifies the calculations and won't materially affect your results.

Frequently Mentioned Websites

These Websites are the primary resources necessary to implement the

analysis described in this book. Most are referenced in throughout the book, so I've listed their Web addresses (URLs) here rather than everywhere that they appear.

The addresses of additional Websites required only for specific analysis strategies are included where they're referenced.

Free Edgar: All firms' SEC reports are posted on the SEC's own EDGAR database, but most reports are lengthy and it's difficult to locate specific information. Free Edgar and a number of other sites provide a table of contents for most reports so than you can locate and download specific sections such as the management's discussion, the statement of cash flows, and so forth. Most of these sites require a subscription, however Free Edgar, as the name implies, as of May 2002, was still free.

Hoover's: A good source for an easy to understand company description, and best of all, a usually accurate list of a firm's top three competitors.

Morningstar: Morningstar's Financials report saves you the trouble of computing trailing 12 months' operating cash flow, a data item required in the Busted Cash Burner analysis (Chapter 10). Morningstar's Stock Valuation report listing historical price/earnings, price/sale, price/book and price/cash flow ratios for the trailing twelve months as well as each of the past five years is also unique.

CNBC on MSN Money: One of only two sites I've found that provides detailed financial statement data in user friendly format. MSN Money's 10-Year Financial Summary reports are the mainstay of the target price strategy (Chapter 6). MSN Money is the only site I've found that lists EBITDA, a data item required to assess financial strength (Chapter 10), on its income statements.

Multex Investor: In my view, the best source for viewing financial statements. Multex's statements are updated faster, are more accurate, and provide more detail than any other source I've found. Multex's powerful Ratio Comparison report enables you to compare a company's valuation ratios, performance measures, and much more, to its market sector, industry, and to all the firms making up the S&P 500 Index.

Yahoo: My favorite resource for analysts' buy/sell ratings and forecasts because it's the only site I've found that show you analysts' sales (revenue) forecasts. Yahoo's insider trading report is easy to interpret and is the only such report I know of that lists trades going back two years. While you're there, click on Roster to see the names of all insiders, another data item that I haven't found elsewhere.

Read More Show Less

Table of Contents

Acknowledgments . . . xiii

About the Author . . . xxii

Introduction . . . xxiii

PART I GETTING STARTED . . . 1

Chapter 1 The Analysis Process . . . 3

Identifying Potential Candidates . . . 3

Concentrate on the Strongest Candidates . . . 4

Quick Prequalify . . . 4

Detailed Analysis . . . 6

When to Sell . . . 10

Summary . . . 10

Chapter 2 Evaluating Risk . . . 11

Portfolio Risk . . . 11

Risk Factors . . . 12

Spotting Strong Industries in a Weak Market . . . 16

Company-Specific Risks . . . 17

Company-Specific Risks Described in Subsequent Chapters . . . 20

Summary . . . 23

Chapter 3 Screening . . . 25

Morningstar . . . 26

Google . . . 26

Zacks . . . 27

Portfolio123 . . . 27

Google Growth Screen . . . 28

Zacks Growth/Momentum Screen . . . 31

Portfolio123 Down & Out Value Stock Finder . . . 34

Portfolio123 Growth Stock Screen . . . 38

Zacks’ Bulletproof Stocks . . . 41

The Zen of Screening . . . 44

Premade Screens . . . 44

Summary . . . 45

PART II ANALYSIS TOOLS . . . 47

Chapter 4 Analysis Tool #1: Analyze Analysts’ Data . . . 49

Who Are the Analysts? . . . 50

Analysts’ Ratings . . . 51

“Sell” Is a Four-Letter Word . . . 51

Consensus Ratings . . . 53

Do Strong Buys Outperform Sells? . . . 54

Number of Analysts . . . 58

Sentiment Index . . . 59

Analysts’ Estimates . . . 61

Earnings Surprise . . . 66

Sales Forecasts . . . 67

Guidance Changes . . . 69

Research Reports . . . 69

Summary . . . 70

Chapter 5 Analysis Tool #2: Valuation . . . 71

Implied Growth . . . 72

Growth at a Reasonable Price . . . 76

Dividends . . . 80

Summary . . . 80

Chapter 6 Analysis Tool #3: Establish Target Prices . . . 81

The Process . . . 82

Summary . . . 90

Chapter 7 Analysis Tool #4: Industry Analysis . . . 91

The Business . . . 91

Industry Growth Outlook . . . 92

Analysts’ Forecasts Are Good Enough . . . 93

Convert Earnings Growth to Sales Growth . . . 93

Industry Concentration . . . 96

Picking Winners in an Emerging Fragmented Industry . . . 97

Industry Scuttlebutt . . . 101

Summary . . . 102

Chapter 8 Analysis Tool #5: Business Plan Analysis . . . 103

Introduction . . . 104

Overblown Competitive Advantages: Factors That Should Make a Difference But Often Don’t . . . 113

Business Plan Scorecard . . . 115

Summary . . . 115

Chapter 9 Analysis Tool #6: Evaluate Management Quality . . . 117

Key Executive and Board Quality . . . 117

Clean Accounting . . . 118

Earnings Growth Stability . . . 120

Stock Ownership . . . 122

Summary . . . 122

Chapter 10 Analysis Tool #7: Analyze Financial Fitness . . . 123

Financial Fitness Counts . . . 123

Pinpointing Financially Challenged Companies . . . 124

Simplify the Problem . . . 125

Detecting Potential Busted Cash Burners . . . 27

Detailed Fiscal Fitness Exam . . . 136

Bond Ratings . . . 150

Use Bond Prices to Identify Risky Debtors . . . 152

Summary . . . 153

Chapter 11 Analysis Tool #8: Profitability and Growth Analysis . . . 155

Where Do Earnings Come From? . . . 155

Analyzing Sales (Revenue) History . . . 161

Analyzing Margins . . . 166

Comparing Margins . . . 167

High Versus Low Margins . . . 172

Analyzing Overhead Expenses . . . 174

Profitability Ratios . . . 175

Cash Flow Analysis . . . 182

EBITDA Versus Operating Cash Flow . . . 189

Summary . . . 190

Chapter 12 Analysis Tool #9: Detect Red Flags . . . 191

Sales Growth Trends . . . 193

Accounts Receivables and Inventories . . . 197

Statement of Cash Flows . . . 204

Yellow Flags . . . 209

Summary . . . 212

Chapter 13 Analysis Tool #10: Ownership Considerations . . . 215

Institutional Ownership . . . 215

Insider Ownership . . . 218

Summary . . . 221

Chapter 14 Analysis Tool #11: Price Charts . . . 223

Trends . . . 223

Moving Averages . . . 225

Value Investors . . . 225

Growth Investors . . . 226

Avoid Downtrends . . . 227

Compare Short- and Long-Term Moving Averages . . . 227

The Risk Zone . . . 228

Chart Types . . . 229

Trading Volume . . . 230

Summary . . . 230

PART III THE ANALYSIS PROCESS . . . 231

Chapter 15 Quick Prequalify . . . 233

Concentrate on the Strongest Candidates . . . 233

Company Overview . . . 234

Valuation Ratios . . . 238

Real Revenues + Real Earnings + Real Growth = Real Stock . . . 241

Check the Buzz . . . 243

Summary . . . 244

Chapter 16 The Value Investing Process . . . 245

Concentrate on the Strongest Candidates . . . 245

Cycles . . . 247

Normalizing . . . 248

The Value Analysis Process . . . 248

When to Sell . . . 271

Summary . . . 273

Chapter 17 The Growth Investing Process . . . 275

Concentrate on the Strongest Candidates . . . 275

Growth Candidates . . . 278

The Process . . . 278

When to Sell . . . 315

Summary . . . 317

Chapter 18 Analysis Scorecards . . . 319

Value Stock Analysis Scorecard . . . 320

Growth Stock Analysis Scorecard . . . 326

PART IV APPENDIXES . . . 333

Appendix A Industry Information . . . 335

Appendix B Economic Data . . . 341

Appendix C Earnings Reports and Conference Calls . . . 343

Reported Earnings . . . 344

Summary . . . 346

Appendix D Detecting Scams, Frauds, and Pump and Dump . . . 347

Summary . . . 350

Appendix E How to Read Financial Statements . . . 351

Income Statement . . . 352

Balance Sheet . . . 353

Statement of Cash Flows . . . 355

Finding the Data . . . 357

Pro Forma Accounting Versus GAAP . . . 358

Appendix F Glossary . . . 359

Index . . . 367

Read More Show Less

Preface

Introduction

"Not everything that can be counted counts, and not everything that counts can be counted."

—Albert Einstein

This is a book about analyzing stocks.

The process of writing this book turned out to be a huge educational experience for me. I thought that I knew something about the subject when I started. After all, I'd been teaching it, writing about it, and doing it for years.

I had pored over scores of investing how-to books by famous and not so famous gurus and studied their teachings. I meticulously researched how I would have fared if I had followed their strategies in the past. Based on their work, I synthesized and tested my own strategies.

In the process of researching this book I interviewed 15 professional money managers and market analysts. I had never met any of them when I started. I found some because they managed best-in-class mutual funds with solid long-term market-beating performance records. Others were market analysts or private money managers practicing innovative strategies that I'd heard about from other professionals or through their own writings. About half of those I contacted graciously agreed to talk to me.

In truth, I may have misled them. They probably thought I was writing one of those books that features a single guru per chapter, a sort of minibiography describing their childhood, working style, office environment, as well as their investing methods.

I didn't do any of that. I focused our conversations on just three areas: (1) how do they identify investment candidates, (2) how do they analyze them, and (3) how do they decide whento sell.

I had interviewed money managers before, but not at that level, and not in this context. It was an on-the-job learning experience, and I flubbed the first couple, in terms of asking the right questions. But after a while, I got the hang of it.

Interviewing a money manager is a lot different from reading a book they've written, or hearing them speak. For starters, you don't have to go over the same ground if you've already read their works, or heard descriptions of their methods. Instead, you can zero in on the details, asking questions like: How do you define overvalued? How do you identify good management? How do you pinpoint an industry's strongest player? What are your sell signals?

Often the conversations took me to unexpected places. For instance, I was unaware of Porter's Five Forces Model before Nicholas Gerber gently brought it to my attention (by the time Ken Shea mentioned it a week or so later, I responded as though it were old hat). The Porter model inspired the business plan evaluation strategy that became Tool #5.

Some interviews led me to academic research that I'd always assumed was just too, well, academic, to be of interest. That's how I discovered the work of University of Chicago Business School professor Joseph Piotroski, whose research inspired the fiscal health exam featured in Chapter 10.

Perhaps my biggest surprise concerned value investing. I could never figure it out before. I'd read the books packed with data proving that low P/E stocks outperform glamour stocks, but I could never make it work. The turkey's P/Es just kept getting lower after I bought them. After interviewing several money managers, it hit me that what they did bore little resemblance to what I'd read about value investing. They weren't buying low P/E stocks. They were buying great companies that had stumbled! There's a world of difference between those two approaches.

The wealth of information that these market experts and researchers so kindly shared with me forms the basis for what follows. But being an ungrateful sort, I didn't give them their deserved recognition by describing each of their strategies separately. Rather, I distilled them into the combined analysis tools and strategies that make up this book.

Who Should Read this Book

This is not a get-rich-easy kind of book. There are no magic formulas revealed. I wrote it for people who know that making money in the stock market takes more than running a screen or watching CNBC. I wrote this book for investors willing to put in the time and effort it takes to find and research profitable stock investments.

What's in this Book

I've read many investing books filled with great concepts and strategies that left me feeling unfulfilled, because they didn't tell me how to put those wonderful ideas into practice. This book describes practical step-by-step strategies for finding, researching, and evaluating investment candidates. Equally important, it also tells you when to sell.

I describe two step-by-step strategies, one for growth stocks, and the other for value investors. Some experts advise that both are, in fact, similar strategies. While it's true that you can have a value-priced growth stock, the two analyses processes are very different. When value investors are selling, growth investors are buying. So it's unlikely that the value and growth investors would own the same stock at the same time. While the two strategies are different, they draw on a common set of analysis tools.

What's Different?

This isn't a rehash of conventional wisdom and familiar strategies. The methods described make use of information readily available to anyone connected to the Internet, but in new ways, including:

How to Gauge the Risk of Owning a Specific Stock

In the past, investors hrelied mostly on past performance to determine the risk of owning a stock. But in the end, stocks move in response to changes in a company's earnings prospects. A price chart shows you history; analyzing fundamentals can help you see the future. You'll discover how to use those fundamentals to evaluate the risks specific to each stock.

Analyzing the Analysts

Recent events demonstrate that you can't depend on analysts' recommendations to make money in the market. But there's still much to be learned from their ratings and forecasts.

What a Stock's Valuation Tells You

Knowing the expectations implied in a stock's valuation tells you much about the rewards versus risks of owning the stock.

How to Set Target Prices

Something that the pros always do, but nobody ever told you.

Industry Analysis

Has your candidate picked a market worth pursuing? If so, are you riding the winning horse?

Business Plan Analysis

Is your candidate more like Wal-Mart or Kmart? Analyzing its business plan will help you find out.

Financial Fitness Evaluator

Bankruptcies are bad news for stockholders, but nobody ever told you how to find out if your stock is a bankruptcy candidate.

How to Use Sale Forecasts

Analysts' consensus sales forecasts have only recently become available. Here's how to use them to identify companies likely to come up short at earnings report time.

Analyze Profitability

Profitability is more than earnings per share. Here's how to find out if your candidate is really making money.

Detect Accounting Shenanigans

Some executives will do whatever it takes to meet earnings forecasts. Here's how to find out if they're cooking the books to do it.

When to Sell

Specific rules for selling, depending on whether you're a growth or value investor.

Notes on Examples

Most of the examples used to illustrate the recommended analyses strategies draw on data that was available on a particular historical date. However, many of the strategies developed out of interviews and research conducted specifically for the book. Consequently, the examples demonstrate what could have been done, but not necessarily what I did on those dates.

Many examples compare annual operating characteristics of firms that have different fiscal year-end dates. For the sake of clarity, I used the closest calendar year for the comparisons. For instance, if one company's fiscal year ended November 30, 1999, and another on January 31, 2000, I labeled the annual data for both as calendar year 1999. So while the figures shown may be technically inaccurate, they're close enough to support the point made by the examples.

Accounting Shortcuts

Certain accounting formulas such as return on assets call for determining the average asset totals over the course of a year. Instead, I use the year-end figures because you can pick them directly off of the balance sheet instead of having to calculate them. Consistently applying such shortcuts simplifies the calculations and won't materially affect your results.

Frequently Mentioned Websites

These Websites are the primary resources necessary to implement the

analysis described in this book. Most are referenced in throughout the book, so I've listed their Web addresses (URLs) here rather than everywhere that they appear.

The addresses of additional Websites required only for specific analysis strategies are included where they're referenced.

Free Edgar: All firms' SEC reports are posted on the SEC's own EDGAR database, but most reports are lengthy and it's difficult to locate specific information. Free Edgar and a number of other sites provide a table of contents for most reports so than you can locate and download specific sections such as the management's discussion, the statement of cash flows, and so forth. Most of these sites require a subscription, however Free Edgar, as the name implies, as of May 2002, was still free.

Hoover's: A good source for an easy to understand company description, and best of all, a usually accurate list of a firm's top three competitors.

Morningstar: Morningstar's Financials report saves you the trouble of computing trailing 12 months' operating cash flow, a data item required in the Busted Cash Burner analysis (Chapter 10). Morningstar's Stock Valuation report listing historical price/earnings, price/sale, price/book and price/cash flow ratios for the trailing twelve months as well as each of the past five years is also unique.

CNBC on MSN Money (money.msn.com): One of only two sites I've found that provides detailed financial statement data in user friendly format. MSN Money's 10-Year Financial Summary reports are the mainstay of the target price strategy (Chapter 6). MSN Money is the only site I've found that lists EBITDA, a data item required to assess financial strength (Chapter 10), on its income statements.

Multex Investor: In my view, the best source for viewing financial statements. Multex's statements are updated faster, are more accurate, and provide more detail than any other source I've found. Multex's powerful Ratio Comparison report enables you to compare a company's valuation ratios, performance measures, and much more, to its market sector, industry, and to all the firms making up the S&P 500 Index.

Yahoo (quote.yahoo.com): My favorite resource for analysts' buy/sell ratings and forecasts because it's the only site I've found that show you analysts' sales (revenue) forecasts. Yahoo's insider trading report is easy to interpret and is the only such report I know of that lists trades going back two years. While you're there, click on Roster to see the names of all insiders, another data item that I haven't found elsewhere.

Read More Show Less

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Sort by: Showing all of 9 Customer Reviews
  • Anonymous

    Posted December 30, 2003

    Thoroughly Excellent

    For the beginner or the more experienced investor this book is a must. Although it provides cook book approach to the use of analysis it also provides indepth explanations. When you have finished reading it you have both an understanding and a method.

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  • Anonymous

    Posted November 15, 2002

    Everything You Need to Know

    This is a surprisingly complete guide for analyzing stocks. It seems to cover all the bases including ideas that I haven't seen before for evaluating a company's business plan and its management quality. It describes 10 or so tools for evaluating stocks in various areaa such as valuation, managment quality and financial health, and then tells you how to apply those tools to value and growth stocks. I was surprised at how differently the tools are applied in those instances.

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  • Anonymous

    Posted November 23, 2009

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  • Anonymous

    Posted February 14, 2010

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  • Anonymous

    Posted April 5, 2010

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    Posted January 20, 2012

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  • Anonymous

    Posted November 13, 2009

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  • Anonymous

    Posted May 17, 2010

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  • Anonymous

    Posted May 17, 2011

    No text was provided for this review.

Sort by: Showing all of 9 Customer Reviews

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