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Union Of Fundamentalist Stock Pickers Forum > What criteria do you take into consideration before pulling the trigger?
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UPod

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Just curious as to what others on this board evaluate (long & short term) when determining whether to buy (or sell) a stock.


Some of the things I look at include:
• Historical ROIC, Revenue, Earnings, BVPS, & Cash Flow Growth Rates (going back 10 years).
• 10, 5, & 3 year average PE ratio ( compared against current PE )
• PE / Growth Rate ( PEG )
• Total Assets / Total Liabilities
• Total Long Term Debt
• Current Assets / Current Liabilities
• Total Outstanding shares ( decreasing rather than increasing )
• Future 5 year expected earnings growth rate
• Historical Dividend Payouts (increasing or decreasing).
• Competitive Advantage
• International Exposure
• Operating Margins

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Will Profit

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I give creedence to some degree to your list when it's something I want to buy into for the long run. I have learned a painful lesson when I used these points for a quick "turnaround" play. I have learned that an important part of my trading strategy on these trades is "THE TREND IS YOUR FRIEND. "
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corbinb2

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I am currently using Investools Toolbox for a lot of my research, but I have to say I am probably most accurately defined as a fundamentalist day-trader. Typically I screen stocks for good volume (average over 1M preferrably) and below $5.00 stock price. Then I look at the recent news to see what may be causing movement in the stock.

Investools (not trying to sell them) provides scores for a group of fundamentals and this helps me determine potential and widdle down the list. Then I put the day trader hat on and look at the trend by looking at the (MACD 8,17,9) and the Stochastic (14,5,0). I also check the trend for the 3 or 6 month period as well as the 2 year period.

All of these things combined help me decide to pull the trigger.  I have to say that some of trigger decision comes down to a feeling. I will watch a stock in a lot of cases to get a feel for how it is moving, but always rely on the fjundamental scores to help make the decision. Sometimes you can look at a company like say Ford who was between $5 and $6 earlier this month. Companies of this size 'generally' find ways to recover and grow so you may have to buy low and wait it out a little.

The key is don't get greedy. With the right volume, selling on a 25 or 50 cent bump in the price is okay. If you buy a $5.00 stock and sell at $5.50, you have just made 10%. Not bad considering in a lot of cases that small movement can happen in a very short period and just 3 of these trades in a month is 30% return and 360% over the course of a year. How many investors can say they average 1% increase a day on their portfolio?

All of these things are in my mind when considering buys and sells. Sometimes one thing trumps another, but it's all in there. My strategy may not work for everyone and I am still learning. All I can say is do your research, take a breath before you jump and then don't get greedy.

 Hope this helps!

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Running_with_scissors

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I pull the trigger with my ego.  :D 
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buydow

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I try to do legwork that others don't to spot a target. This afternoon I was in 3 Rite aid stores chatting up the managers."Your store is really looking nice after the remodel. Have you noticed traffic picking up?" (The Peter Lynch method)

Then, like Buffet opines,  I try to stick with what I know.Summers in college were spent working for an outside contractor in a steel plant that was sold years later to Bethlehem Steel. When they went bankrupt, Willbur Ross came in and picked them up for peanuts. He consolidated them with other like properties as ISG. I bought ISG. Sold to Mittal at a huge profit. Wilbur Ross then turned his attention to Coal. I own ICO (International Coal Group). They have a great investors portion of their site that you just don't find on news releases. That they are 100% non-union, for instance. Anyone that thinks that does not make a difference has never had a real job.

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Will Profit

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Buydow, I have July calls on RAD. We don't have any of their outlets where I live. Would you share what the managers said?
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corbinb2

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I'd be interested what the Brooks and Eckerd's managers are saying also.
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corbinb2

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Wherever E GOes, money flows...whether that is in or out is up to you I guess...lol
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microcaps

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I look at most of what you mentioned, and I also looked at:

1. Their attractiveness and usefulness of the product/service and how likely it is to still be attractive and useful in the next 4-5 years, or more. (moat)

2.  The current management (integrity and competency) 

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lifeisgrand

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My exit is strictly technical.   Fundamentals are slow to act so they don't drive my departure.   Emotions/news/earnings may cause a sudden turn in the stock, but the departure is based on the technical factors that will appear because of the emotions.    I always stop out at negative 7% no matter what - that's a hard rule.   I squeeze my trailing stop as a profitable trade increases - its wider at +5%, more narrow at +15%, very narrow at +20%.  
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kcty

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I see Microcaps likes the C-A-N-S-L-I-M method (Moats reference)...also used in morning star trading tech.
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Yourst Ox

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Charts.
Couldnt care less about the rest. I look for a stock that has gone down less than 5% in 1 week on lower than average volume. The next week I set my buy point at the high from the week before.
If it hits that high, BUY BUY BUY...........
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Lamp

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The first thing I look for is the current trend of the market. The current trend is a market correction. So I look for put options on the worst stocks in the worse industry. When the trend of the market is going up, than I look for the best stocks in the best industry.  Also at one time or another I have used  some the above thoughts in my decisions. I use charts and I study the fundamentals of a stock.
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