Friday, 26 June 2009

Some thoughts on Analysing Stocks

Ideally, a stock you plan to purchase should have all of the following charateristics:

  • A rising trend of earnings, dividends, and book value per share.
  • A balance sheet with less debt than other companies in its particular industry.
  • A P/E ratio no higher than average.
  • A dividend yield that suits your particular needs.
  • A below-average dividend pay-out ratio.
  • A history of earnings and dividends not pockmarked by erratic ups and downs.
  • Companies whose ROE is 15 or better.
  • A ratio of price to cash flow (P/CF) that is not too high when compared to other stocks in the same industry.

Keep It Simple and Safe.

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