5 Steps in Finding Stock Investment

We all know that opportunity does not come knocking every day. The phrase 'lightning never strike twice on the same place' illustrates the point. Investors are successful because they can identify opportunity as well as the courage to act on it. This article is written to identify what constitutes a good turnaround stock investment. Here are several steps necessary in finding your next stock investment.

Scour the 52 week-low list - This is a useful preliminary screening where you identify stocks that has fallen. While stocks that fall have their own specific problems, it is generally better to buy low rather than high.

Calculate Its Net Cash. The next step would be to gauge the strength of the company's balance sheet. This is done by calculating the company's net cash. Net cash is calculated by adding cash equivalents, short term investments and long-term investments in the asset column and subtract it with long-term debt. If possible, you need to find stocks that has a positive net cash valued at 10% of its market capitalization or more. All the companies in our stock portfolio has positive net cash.

Calculate Earning Per Share Going Forward. This step is critical in determining the fair value of the common stock. It is also the hardest part to master in stock investing. Generally, you predict earning per share by constructing your own pro-forma income statements where all its components are based on your prediction of the company. At the bottom of the income statement is the profit/loss figure in which you can convert to earning per share.

Calculate Fair Value. When you obtain your earning per share figure, you can then calculate the fair value of the common stock. Fair Value differs for various investors depending on their investment objective. With current interest rate environment, I set the fair value when the company can give me a return on investment (ROI) of roughly 7.5% year after year. To give you an idea, an ROI of 1 % means that for every $ 100 you invest, you will get $ 1 back annually. For common stocks, this means that for every $ 13.4 of investment, common stock holders will get $ 1 in profit. As you may know, this translates into a fair Price Earning Ratio of 13.4.

Determine Your Entry Point. You have found the fair value of your stock. It is now the time to decide where and what price you want to buy your investment. Investors' job is to make money. Therefore, we should not buy a stock at its fair value. We should sell at fair value or if heaven permits, at overvalued level. But, we should buy at below fair value. This depends again on your investment philosophy. If taking 10% return is fine with you, then you can buy a stock that is trading at 10% below fair value. I personally think that investors should buy a stock that is at least 30% below its fair value. This is because of the uncertainty in the earning per share figure of a common stock. As you may remember, we need to predict this earning per share at step # 3. We compensate our inability to forecast earning per share by buying our stocks 30% below fair value.

Other investors might have different ways of picking for their stock investment. But the basic idea is still the same. They want to buy lower than their expected sale price. In our case, our selling price is when a stock reaches its fair value. A lot of investors mistook fair value as the buying point. Hopefully, reading this will change your perception about that.

Cutting Through the BS and Finding Stock Buying and Investing Advice That Works

There are a billion different types of investment advice out there; books, websites, articles, guru's, CNN, the list can go on and on. So it begs the question...If I want to make money stock buying and investing who do I listen to? Excellent question. I have found for financial advice there are many different levels. First off everyone and their dog wants to give financial advice. Everyone handles money in their own way and everyone wants to advise someone else on how to handle it. I have never met a person that says, 'Don't take my advice on money...go somewhere else.' If we find that person we should shake their hand because that is probably some of the best financial advice ever given.

I have found a little secret when it comes to stock buying and investing, and I will give it to you. If you wanted to become the best bicyclist in the world who would you listen to....Lance Armstrong. If you wanted to become the most famous basketball player in the world, who's advice should we open up to? Michael Jordan. If you want to make money investing who should you listen to? Not your financial advisor (80% of financial advisors do not invest in what they tell their clients to invest in), not the guru's on T.V. They are paid to present news and financial advice that sells, not advice that works. You should not even listen to the wealthy. There is an abundance of wealthy and many of them are also stuck in their own paradigms of wealth. If we want to make serious money take advice from the super wealthy. I am talking billionaires. Not just any billionaires, but the billionaires that have wealth, charity, and balanced lives. Warren Buffett is the poster child for an investor to mimic. I would also add Jim Rogers and Robert Kiyosaki.

If you listen....just as if you sat and chatted about how to find success with Wayne Gretzski. You will hear a completely new paradigm when they speak. It blows my mind. These investors tell you exactly what they are investing in, how they are doing it, and they like to help others do the same. People just don't listen....or know how to listen.

There are two different types of investors. Most investors are what we call 'Methods Investors'. Those that find the most success and profit are 'Principles Investors' these are the ones to watch for and follow.

The author invites you to learn more about stock buying and the difference between a 'Methods Investor' and 'Principles Investor'. Also if you are pondering unique business ideas this is the place to make your ideas a reality. Knowing the difference between Methods and Principles investing is the same as the difference between Methods and Principles in business.

Finding Stock Symbols Made Easy

You've decided to explore the exciting world of trading stocks. At first blush, it appears nothing but a mishmash of letters, numbers and symbols. To a novice the market can certainly appear quite intimidating and scary. There is much to learn. Let us start off with the basics by first discussing finding stock symbols.

The three or four letters you see many times flashing across the bottom of the screen of your television are a symbol which represents a given stock. There are many variations, but most commonly a stock symbol has either three or four letters. One can decipher an initial tidbit of information from this.

Those with three letters typically trade on the New York Stock Exchange (NYSE). After a recent merger with a European counterpart this exchange is actually now called NYSE Euronext. Many major corporations trade on this exchange including some of the largest in existence. Many large NYSE stocks have been commonly referred to as "blue chip stocks" signifying the highest quality.

Stocks with symbols containing four letters typically trade on what is called the NASDAQ. This exchange mostly exists in cyberspace. It is an electronic exchange matching buyers and sellers without the assistance of a human in between. The NYSE many times has a person in the middle facilitating the given trade.

NASDAQ traded stocks can also be large multinationals, or they can range down to the tiniest of "microcap" stocks. A "microcap" stock is generally defined as one worth under 100 million dollars in totality. There is a very large universe of stocks to select from. Most of the new and "trendy" technology stocks mostly all trade on the NASDAQ as opposed to NYSE.

So you notice a hot new product at the store, or a great service you saw online, and you now want to know about that company's stock. The first step is to figure out the symbol which represents it. Today, online, this is easily done. You can go to virtually any finance web site or portal and use what is commonly termed the "symbol lookup" function. This allows you to type the company's name in a box and the system will respond with the appropriate symbol.

Keep in mind, some stocks can have multiple symbols for different classes of stock. You need to pay attention to which one you desire to select. Once you have the right symbol you are then able to enter it into your "watch list". This is a list provided by most brokerages on your account that you can use to track the price of your stock as it moves hopefully up.

There are many difficult parts to the markets. However, finding stock symbols is an easy step. Anyone can do it. Go to a few sites, pick a few companies and see if you can find the right stock symbol. Once you are fluent in this exercise you are ready to move to the next step towards profiting in today's markets.