# Fundamental speccy filters



## Gringotts Bank (13 August 2017)

1- Tiny market cap.
2- Low price-sales ratio.

These stocks seem to perform very strongly.  Problem is liquidity and spread which can be completely prohibitive.

Open for comments/suggestions.


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## Cam019 (13 August 2017)

For trading or a long term hold?


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## Gringotts Bank (13 August 2017)

Cam019 said:


> For trading or a long term hold?




Medium term trade.


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## Cam019 (13 August 2017)

Debt/equity ratio.


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## systematic (13 August 2017)

Cam019 said:


> Debt/equity ratio.




On what basis?


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## systematic (13 August 2017)

Gringotts Bank said:


> 1- Tiny market cap.
> 2- Low price-sales ratio.
> 
> These stocks seem to perform very strongly.  Problem is liquidity and spread which can be completely prohibitive.
> ...




Not a bad place to be looking, at all.  

And, you're spot on re: liquidity / spread costs.  My (rather simple) solution:  ensure appropriate liquidity filters to begin with.


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## Cam019 (13 August 2017)

systematic said:


> On what basis?



On the basis that companies with no to low debt loads have a better chance of surviving economic or industry downturn. It's just something I like to look for when screening for potential investments.


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## luutzu (13 August 2017)

Cam019 said:


> On the basis that companies with no to low debt loads have a better chance of surviving economic or industry downturn. It's just something I like to look for when screening for potential investments.




With Debt/Equity... I think it's worth to also look into what makes up that Equity.

Bankers tend to know what they're doing so they usually won't be lending above a certain ratio of debt to equity. I mean, if most of the company's assets are funded by the bankers, they might as well buy the whole company. So they would generally be looking into this aspect.

Reason you'd want to break down the equity is to see what makes up most of that equity... Retained Earnings (i.e. profit kept back after paying dividends). Or made up mostly of Contributed Equity - new cash from issuance of new shares/dilution.

If Con.Equity keeps rising over the years... the debt/Equity ratio can remain constant at whatever "safe" level... and it's still a pretty bad business to get into.


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