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Stock Evaluation - Beyond the SSG

Manuals for the software are available for free download by clicking here.

You've found stocks to evaluate using Stock Prospector, Stock Investor Pro or some other stock screener. What now? The Stock Selection Guide (SSG), of course.
Once you've completed the SSG, is that enough to BUY a stock? I don't think so. Now what do you consider (analyst opinions, annual reports, CNBC)? Where do you look (Yahoo, MSN, broker sites)? What additional tools do you use (Robertson Quality Rating aka RQR, spreadsheets)? At what point has there been enough additional analysis to actually buy a stock, or do you keep researching, seeking that last piece of corroborating data and never really buy anything?

Click Here to learn more about other data sources, understand the data you used to perform your analysis, and other resources you can use to enhance your stock analysis.

The other 20%

It has been said the SSG contains 80% of what you need to know about a stock to invest in it.

This other 20% seems to be quite intimidating until you realize it is simply continuing the evaluation of management's growth and efficiency begun by the SSG. You'll hear scary terms like common size financial statements, vertical, horizontal, and ratio analysis.

Scary until you realize we already do a 10 year horizontal analysis of the income statement in the visual analysis of the SSG and use two examples of ratio analysis in sections 2A & 2B on the back of the SSG.

This other 20% is a simple continuation of looking at other results from management.

For some guidance through this uncharted territory take a look at the annual report section here at BIWiki and further your BetterInvesting skills.

Stock Evaluation

Here's one suggested process:

1. Find an interesting stock.
2. Find competitors in the same industry.
3. Look at visual analysis for this group and decide which stocks look like NAIC type stocks.
4. Read Value Line, S&P Report, and 10K or 10Q MDA for information about the companies.
5. Prepare SSG.
6. Use SCG to compare quality. (growth and efficiency)
7. Use SCG to compare risk and reward.
8. Purchase stock.
9. Maintain watch list of quality stocks not valued for purchase.
10. Follow purchased stocks for problems with their fundamentals. (Defense)
11. Follow purchased stocks for grossly overvalued situations. (Offense)
12. Check diversification periodically.

(The last three items fall under portfolio management)

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Does someone else have another methodology? List it below here, and so on ...

(The following directions courtesy of Jim Thomas)

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