(ready to paste back into Word)…
Saul’s Template from KB
Here is a template derived from Saul’s KB#9939. I found it useful for forcing good research and providing good data for the community.
PuddinHead’s Instructions:
- copy/paste into Word then replace “” with “” to allow the formatting commands to work when you paste into the message board. (Make your own permanent Word template!)
- Do the research and fill in the blanks. (I recommend doing all work in Word before pasting into the message board, this could take days!)
- Consider starting the answers to most questions with your opinion of Pass/Fail, then add the backup. The community can help and correct you.
- I use this”//” to delimit comments or instructions, you should delete those items to reduce clutter.
//first check the community spreadsheets. Someone may have done some work to show this is worth looking at, or has a horrible 1YPEG.
//https://docs.google.com/spreadsheets/d/1H_v6WOjFi81rM3TH9ZHS…
//https://docs.google.com/spreadsheets/d/1YzNpy4rWZNqf5L2aP8uf…
//second, don’t “trust” yahoo, but do a quick check of earnings and earnings estimates there, that could tell you it is not worth getting the real data from the Quarterly reports.
B>Saul Analysis:/B> (see KB#9939)
*B> look for companies that */B> are growing fast, have recurring income, insider ownership, some kind of moat, reasonable PE, etc, and hope to find most of these qualities in stocks I’m investing in. So…
*B> Company Web Site: */B>
*B> Brief Overview: */B> //probably from the web site or yahoo profile.
B>look for companies that are easy to follow/B> (e.g. already a pick by MF)
*B>Don’t need to understand the technology/industry */B> (just the growth financials)
want a company with B> rapidly growing earnings/B>
look for *B>recurring revenue */B> (e.g. Razor blade model)
look for substantial *B>insider ownership */B>
look for a company with *B> rapidly growing revenue. */B> (at least 25% per year)
*B> Get the information yourself. */B> (Not yahoo, etc)
B> look for a company that has a long way to grow long runway. One that ideally can grow almost forever/B>
*B> Not too big to grow/double/triple */B> (e.g Sketchers not Nike)
want a company that *B>does something special, */B>
want management to be *B>interested in making a profit. */B>
*B> avoid mining and drilling and natural resources stocks, */B> which tend to go in cycles from boom to bust
*B>don’t usually buy restaurant chains. */B> They seem inherently limited
//this is where the real work comes in. You might even want to make it a second post from the above data.
B> Addition research ideas for evaluating a new company./B>
B> tidbits from last quarterly report/B>
//you should read the Q report, let us know if there is anything interesting
B> tidbits from the last Conference Call:/B>
//you should read the Conf Call, let us know if there is anything interesting.
//You should be able to find it on Seeking Alpha “Zillow Q1 2015 Transcript” should get it.
// (Yep, I put it in on Seeking Alpha and it came right up.)
*B> two years of revenues: */B>
// first check the community spreadsheets to see if someone has done the work!
//Go back through at least two years of quarterly reports and pull off at least adjusted earnings and
//revenue. Make a table for each. Let’s look at stock ABC. Here’s what their Revenues looked like:
*pre>
*pre>
Year Q1 Q2 Q3 Q4 Year % change
2012 20 25 30 35 110
2013 40 45 50 60 195 77%
2014 70 90 100 120 380 95%
*/pre>
*/pre>
//PuddinHead likes to use Excel to create the table and do the calcs, then paste into Word like above.
//You may not get enough data to do % calcs, but it would be interesting.
//You could fill in the missing data with estimates from Yahoo, but then you must tell us which are est.
//For both earnings and revs, PuddinHead recommends getting estimates from Yahoo and building table similar to the above and below.
// http://finance.yahoo.com/q/ae?s=SWKS+Analyst+Estimates
*B> two years of adjusted earnings */B>
*pre>
//same format as revenues above.
*/pre>
*B> 12 month trailing earnings: */B>
*pre>
*pre>
12 2012: 22
03 2013: 28
06 2013: 34
09 2013: 48
12 2013: 59
03 2014: 70
// Saul says: You should graph this on a piece of log paper.
//PuddinHead says it might be interesting to draw out the future TTM in pencil and then see how actuals matchup with future TTM derived from estimates. Estimates are just guesses, but they might help visualize something interesting.
*/pre>
*/pre>
//This could be part 3 of a post if you have the energy…
Here’s B> another a nice way to evaluate companies/B> for investment.
*B>Good Free Cash Flow? */B>
//Using this method, the first step is to look at Cash Flow.
//You want to make sure the company is self-sustaining, producing positive Free Cash Flow, and not eating away at its Cash Balance.
//You’d also like to see Free Cash Flow as a percent of Revenue (Free Cash Flow Margin.) grow from year to year.
*B>Operating Margins increasing? */B> (Revenue growth faster than operating expenses growth)
B> Is share count increasing too fast?/B> (Provide summary and link)
// link us to the stock at this site https://ycharts.com/companies/WPRT/shares_outstanding it has a data table and nice visuals
//The WPRT examples shows lots of dilution – bad!
*B> Is P/FCF less than 30-ish? */B> ( Price to Free Cash Flow ratio?)
//you can cheat here: http://finviz.com/quote.ashx?t=swks
// you might copy paste the statement from the link below (substitute your ticker symbol)
//http://www.gurufocus.com/term/per%20share_freecashflow/SWKS/…
//it annoyingly tries to get you to join, but you can get the data.
*B> low debt levels? */B>
//you can cheat here: http://finviz.com/quote.ashx?t=swks
B> good cash levels?/B>
//anybody got a good “cheater” source, or is it straight to the reports?
*B> tidbits on competitors and risk: */B> (see the 10K)
//PuddinHead says Yahoo Finance shows a list of competitors
//http://finance.yahoo.com/q/co?s=SWKS+Competitors
B> Conf Call notes/B>
// Read the last couple of conference call transcripts to see how management feels about the business now and in the future. – let us know the good stuff.
//this was also included in above sections
*B>Other useful links */B>
(investor presentations, interesting new links, charts from FinViz and/or Stockcharts.com)
