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contrarianinvestor
18-08-2009, 05:00 PM
What are the most important aspects that I should consider when selecting shares? What are your typical buy/sell signals? It will be useful to get a list here. Thanks.

shasta
18-08-2009, 08:07 PM
What are the most important aspects that I should consider when selecting shares? What are your typical buy/sell signals? It will be useful to get a list here. Thanks.

These are some of the criteria i use to select resource type stocks.

* Producers, or near term only (<12 months)
* Companies with cash/generating cash
* Companies that make capital returns/takeover plays
* Debt gearing <25%, or min 5 times interest covered
* Companies trading well below "fair value" (refer broker valuations)
* Companies with good growth prospects (i.e. P/E < 10)
* Companies with “above average” ROI/ROE (increasing over 5 years)
* Top 20 Shareholders holding over 50% of shares on issue
* Decent Board/Management, who owns 10%+
* Companies that promote themselves via investor presentations & communicate with shareholders

Not all companies fulfill all of the points, but it helps filter the better options

POSSUM THE CAT
19-08-2009, 08:27 AM
Stage ONE Engage Brain

contrarianinvestor
19-08-2009, 12:55 PM
Companies with good growth prospects (i.e. P/E < 10)

Thanks for your insights. What do you mean by "growth prospects" - share price or business sales/profits?

Another question. If you see a company at a very low P/E (such as 3) what does that imply? Bargain or serious trouble in the business?

shasta
19-08-2009, 01:27 PM
Thanks for your insights. What do you mean by "growth prospects" - share price or business sales/profits?

Another question. If you see a company at a very low P/E (such as 3) what does that imply? Bargain or serious trouble in the business?

Good questions ;)

What i meant is, say you check the healthcare sector average P/E ratio, probably the most they have dropped is to around 10 - 12 even in a recessionary environment during a global credit crunch!

A decent well run company, with a history of performing with a fwd P/E < 10, may be undervalued (this is where peer comparison comes in)

I'll use SIP as a healthcare example, they have forecast 2010 P/E @ 12.5, & 2011 P/E @ 11.5, ASB Sec shows the sector average at 14

SIP is slightly undervalued if compared to the Healthcare sector average.

(SHL has forecast 2010 P/E @ 14.4, RHC has 2010 @ 13.5 etc)

Some companies with a history of exceeding expectations command a premium, & may trade on P/E's of 20 - 30 (especially in bull markets).

(If you check the Investment section - re Water - i have illustrated UGL who over 5 years every year grew revenue, profits, eps & dividends. There fwd P/E is ~14 when the sector average is ~9).

As for companies with low P/E's, below say 4 - i'd be very wary & would look into this in quite some depth.

I'd check out debt levels, cash levels, any profit down grades etc

Usually abnormal items, ie one off transactions could be the cause, or else a SP slide (& if the charts ugly, run for the hills!).

In saying that, there are bargins that the market overlooks from time to time, my ASX thread on MNL highlights this.

Remember a company's forward P/E is only one piece of the puzzle!

Steve
19-08-2009, 06:17 PM
Personally, I find that the level of ramping on Sharetrader is a good criteria for selection...

contrarianinvestor
19-08-2009, 06:41 PM
To learn more Google ADX indicator.
AA
Thanks. I found this link.
http://www.investopedia.com/articles/trading/07/adx-trend-indicator.asp

shasta
19-08-2009, 07:52 PM
Personally, I find that the level of ramping on Sharetrader is a good criteria for selection...

Um, exactly whose ramping Steve?

I gave CI some examples, i dont hold any of those stocks mentioned & AA's post was extremely helpful & informative?

I take issue if your implying i'm ramping :mad:

I've been quite happy to share what i know with those posting in the newbie thread, clearly outlining EXAMPLES.

If you don't want to contribute that's fine, but coming on here to knock those who do, is very counter productive for those who post genuine questions.

dragonz
19-08-2009, 10:31 PM
Personally, I find that the level of ramping on Sharetrader is a good criteria for selection...


Not sure who you are referring to ramping but I've found both sasta and AA excellent contributors who we are lucky enough sharing their different skills on share trader. Both have helped me immensely with my trading over the years that I have been following this forum. One thing I will say is that I have learnt a lot from these two (and others).

Trading or investing is a very personal thing and successes will come from those that at the end of the day are flexible enough to adjust their systems to where they get the best returns.

Im more of a TA trader these days but there’s a healthy fundamental mix to ensure I can sleep at night.

I will always respect those who are willing to share their most valuable experiances.

AMR
19-08-2009, 10:35 PM
For the technical side:

Still in the works, first step is market direction analysis (bull or bear)...my returns have suffered over the last year because I didn't have a system, I relied on my emotions to decide whether it was a bear or a bull market, becoming overly influenced by our friends at the daily reckoning.

Second step is a backtest of entries, still to be done. I need to trust my system.

Third is backtest of exits, still to be done.

For the fundamental side:

Set up asset allocation strategy - Something I can sleep soundly with. I know people here knock diversification but having your portfolio move 2% daily is psychologically better than something which is up 15% in the morning but only up 5% in the evening. Pretty much protects me from a PDZ or URA.

Find small caps only to maximise growth.

Utilise capital raisings as a cheap way to enter stocks for long term holds.

Man I sound like a basketcase, talking about managing emotions.

contrarianinvestor
20-08-2009, 02:35 PM
Thanks to everyone for sharing their knowledge. Steve made a valid comment. (Shasta, I don't think that was aimed at you personally). Rule no 1 should be not to take any specific share recommendation on a public forum seriously. I'm sure there many genuine advice although it is almost impossible to tell whether it is ramping or not.

.

Steve
20-08-2009, 05:08 PM
Personally, I find that the level of ramping on Sharetrader is a good criteria for selection...

This comment wasn't directed at anyone in particular, more a vague reference that I try to avoid shares that are too enthusiastically discussed here on Sharetrader.

With the sharemarket out of popularity, there is not much in the way of ramping these days, but they will be back...

Perhaps I should have added a ;) to my comment?!

Lizard
23-08-2009, 08:22 AM
From a fundamental point of view, I like to see a consistent and progressing strategy for a business upheld by consistent management. Some of the best opportunities from a share price perspective are in businesses that have experienced a "glitch" or are in the early stages of a growth strategy.

I start with presentations - start back about three years and read forward. If there are less than two presentations per year, I look at results commentary. I want to end up with a clear picture in my head of the company - if it doesn't "gel" I stop reading and move on to another company.

Once I've found stocks that "read well", I follow them for as long as it takes - sometimes years, sometimes taking small "trial" positions. Many of my best trades and opportunities have been in stocks I have followed for years and therefore know very well. While following them, I usually stick a bit of data in a spreadsheet so I can see key ratio's at a glance and pick the best looking. After that, it's a case of trying to time trades.

I probably put far too much work into fundamentals and not enough into timing trades.

contrarianinvestor
25-08-2009, 07:46 AM
Here is a good article on 'trading' vs 'investing'.
http://au.pfinance.yahoo.com/b/marcuspadley/176/technical-v-fundamentalwhich-is-best

shasta
25-08-2009, 03:13 PM
This comment wasn't directed at anyone in particular, more a vague reference that I try to avoid shares that are too enthusiastically discussed here on Sharetrader.

With the sharemarket out of popularity, there is not much in the way of ramping these days, but they will be back...

Perhaps I should have added a ;) to my comment?!

Sweet as, i can get a tad sensitive especially when i'm only trying to help, not push my own barrow :o