Value & Growth Investing Criteria

skip9 said:

What I am looking for is what people generally look at when search for Value and Growth Stocks, things such as ratios - what ones are important and what their targets are for each - ROE, P/E (High P/E for Growth, Low P/E for Value) and so on? It is a pretty broad subject but i figured if everybody expressed what they find important and what their criteria is it will help us all out!

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I don't know if any companies could maintain a long term uptrend if they were not fundamentally sound. Identifying these companies that have withstood the test of time is easy with charts. However, identifying emerging companies that will withstand the test of time would be a great skill to have. Good luck with that side of the game.

Anyway, these stocks have maintained a secular uptrend for the last five years. They may or may not meet fundamental requirements.

AND
ANG
ARP
BHP
BKL
BRM
CBA
CCL
CEY
CNA
COH
CPB
CSL
CUS
DMP
DTL
EQN
EXT
FLT
FLX
FMG
FWD
GIR
JBH
KAR
KCN
MAQ
MCC
MML
MMS
MND
MSB
NHC
NVT
ORG
ORL
OSH
PWK
REA
RHC
RIV
SOL
SRX
SST
STO
SUL
TRS
VTA
WOW

Julia said:

Ves, I may be wrong but I have the impression most people approach the market from a fundamental point of view. I know I did. But I've mentioned earlier the 'light bulb moment' when I read Weinstein's book. My whole approach changed and my profitability increased exponentially.

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I think most people who have no strategy tend to say they use "fundamental analysis". In reality their analysis is usually along the lines of "everyone needs groceries, and Woolworths has a good prospects in groceries, therefore WOW is a good buy". Often fundamental analysis is the educated way of saying you have no strategy.

McLovin said:

I think most people who have no strategy tend to say they use "fundamental analysis". In reality their analysis is usually along the lines of "everyone needs groceries, and Woolworths has a good prospects in groceries, therefore WOW is a good buy". Often fundamental analysis is the educated way of saying you have no strategy.

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I think true in a very high number of cases

McLovin said:

I think most people who have no strategy tend to say they use "fundamental analysis". In reality their analysis is usually along the lines of "everyone needs groceries, and Woolworths has a good prospects in groceries, .

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You have hit on the first step I use to filtre stocks - look at the business and work out how they make money. The aim is to find businesses that have a competitive advantage or "moat" that will enable them to grow profits over a long period of time.

McLovin said:

therefore WOW is a good buy"..

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Before I get to this step I need to prove that the business is cheap, not many that pass the first step pass the second as everyone wants a piece of these extraordinary businesses.

To work out the Intrinsic value I look at; ROE, debt/equity, book value, payout ratio and cash flow.

McLovin said:

Often fundamental analysis is the educated way of saying you have no strategy.

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?? Often people follow "hot tips" like lemmings, often people drink their own bathwater, often trading is a zero sum game.

robusta said:

You have hit on the first step I use to filtre stocks - look at the business and work out how they make money. The aim is to find businesses that have a competitive advantage or "moat" that will enable them to grow profits over a long period of time.



Before I get to this step I need to prove that the business is cheap, not many that pass the first step pass the second as everyone wants a piece of these extraordinary businesses.

To work out the Intrinsic value I look at; ROE, debt/equity, book value, payout ratio and cash flow.



?? Often people follow "hot tips" like lemmings, often people drink their own bathwater, often trading is a zero sum game.

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Easy tiger, I'm not criticising funamental investing, it's what I do too. Unfortunately a large (majority?) portion of people who describe their strategy as "fundamental investing" are not really doing that at all.

I have a friend who would describe himself as someone who "looks at the fundamentals". He bough Qantas because a) It's a world class carrier (whatever that means) b) it's on a low P/E c) it has a great brand (a well loved brand <> being able to charge a premium). Actually looking at the fundamentals would tell you Qantas (the business) is a dog and has been for 10 or so years. That was the point I was trying to make.

Boggo said:

Exactly Julia. There is a discussion elsewhere on this site about Michael Covel's book.

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Thanks for the recommendation. I've devoutly spent the last week reading it from cover to cover.

Obviously there is no actual "technical analysis training" in it like most dime-a-dozen books, but philosophically speaking it covers so much ground compared to most investment books.

It has prompted me to read some further books on trend trading (such as Stan's book that Julia suggested), but I am glad that I choose this one first. I have always believed that to understand something you must first understand the philosophical standpoint that is at its core.

Looking forward to finding some more good books; at the very least they will interest me because I'm fond of statistical analsys and basically anything numbers based. I am also interested in risk management and money management (having "paper traded" my own systems for 'sports betting' before; which is not too disimilar). Perhaps this 'trend following' is a great match for my personality. Only time will tell.

Still all over the place trying to find my approach to the share market, but I haven't taken much action (buying or selling) yet and there is plenty of time to learn and test all options.