Investing Research Tools

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Investing Research Tools How to Use Them

• Mike Appleby Bart Stout
• Georgia Tech Student Foundation
• 2006 Mentor Program
• Tuesday, September 26, 2006

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What do you need research tools for anyway?

• Stock Reports
• Stock Picking
• Company Analysis
• Fundamentals
• Technical Analysis
• Industry Analysis
• Competitive Analysis
• Stock Re-evals
• Sector Reviews
• Industry/Economic Reports to the Committee

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What do we have access to?

• The IC provides many resources which are not free
  to the public
• Wall Street Journal
• Investors Business Daily
• MorningStar
• Reuters PowerScreener
• GATECH has other resources available
• See library Value Line
• Investext
• Many free research tools available online
• MSN Money
• Yahoo! Finance
• BigCharts.com

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Stock Picking Things to keep in mind

• The STORY is everything (Peter Lynch)
• We want Strong Fundamentals (outstanding or
  better than industry)
• ROE
• Margins
• Growth Rates/prospects
• Insider ownership
• Institutional buying
• The Industry is just as important as the stock
• Invest in issues we hope to hold for a long
  period of time.

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The Stock Picking Process

• Decide what criteria you desire
• Market Cap lt 2 Billion
• ROE gt 17
• Net Margin gt 7
• Quarterly earnings growth gt 25
• Plug it into a Stock Screener
• Try to find the STORY (what is this company doing
  to grow in the future)
• Read annual report
• Read analyst reports
• Read industry reports
• Revise screen and try again

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The Story What am I looking for?

• Look for something interesting but could easily
  go unnoticed, something that the numbers dont
  already tell you
• This is how you make the BIG on Wall Street
• New exciting product
• showing promise and rapid growth
• Ex. Hansens Energy Drink
• Ex. RELM Wireless new APCO 25 radio
• New Management
• An industry shift
• Ex. APCO 25 industry standard
• Ex. A new need for ethanol (replace additive)
• Intriguing business model or expansion plan
• Ex. La Quinta Inn targeting business travelers
• EX. Praxair building on site facilities and
  locking in 20 year contracts

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Our Stock Screener
You can edit the Screen
Or View the Results
Click on a Saved Screen
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View Results Check out Companies
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Stock Picking IBD 100

• Another great source for stock ideas is the
  Investors.com IBD 100 list.

You can download these at www.investors.com
look on the left toolbar for IBD 100 Use our GTSF
login NOTE Some of the stocks towards the top
of this list will already be discovered watch
this list frequently to see which ones are moving
up!
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Stock Picking ValueLine Investment Survey

• Another great tool is available at the GT
  library.
• Contains several lists including
• Most Timely Industries
• Timely stocks
• Timely stocks in timely industries
• Highest yielding stocks
• Biggest "Free-Flow" Cash Generators
• Stocks with widest discounts from Book Value
• Stocks with highest percentage earned on capital
• There is both a general and Small/Mid Cap edition

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Stocking Picking Process

• Form a list of prospects
• PowerScreener
• Valueline
• IBD 100
• IBD Small Stocks under 10
• Now we have to do deeper research into the
  individual companies and industries

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What we are researching

• Fundamentals
• Story/Industry
• Technicals

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Company Analysis - Fundamentals

• Yahoo! Finance (http//finance.yahoo.com) is my
  personal favorite for fundamentals.
• Also MSN Money, SmartMoney.com, Investors.com,
  MorningStar.com

Yahoo! Finance Toolbar
MorningStar EPS Growth Chart
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Company Analysis Fundamentals

• What are you looking for?
• Profit and Operating Margins need to be as high
  as possible
• ROA and ROE (ROI) need to be as high as possible
• Quarterly and yearly earnings growth needs to be
  positive (especially for a small company)
• Low debt and Debt/Equity ratio
• Institutional Ownership needs to be less than
  60-80, but increasing, especially if it is a
  growth stock
• Remember, you are comparing these fundamentals to
  its competitors and its industry, all industries
  are different but we want the leaders in each
  industry

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Company Analysis Technicals

• BIGCHARTS.COM

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Company Analysis Technicals

• ALWAYS include a 50 and 200 day Simple Moving
  Average (SMA)
• Under moving averages, select SMA then enter
  50,200 in the box next to it
• Look at both Long and Short term charts
• 6 month
• 1 year
• 3 year
• Things to include Volume, SMA 50, SMA 200,
  draw trend lines if you think you can

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The Story/Industry Analysis

• Perhaps one of the most difficult things the
  research!
• START WITH THE ANNUAL REPORT
• Use WSJ, Investors.com, GOOGLE, Yahoo! News, GIT
  Library INVESTEXT PLUS Database.
• Look for articles, analyst opinions, research
  reports.

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Competitor Research

• Finding an appropriate competitor for a company
  can be difficult NEVER rely on Yahoo!s
  competitor list without first checking them out.
• Use multiple sites to find competitors. Also use
  annual report and web searches to find other
  companies which are in similar markets

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10 things to remember when doing a stock report

• DO NOT fall in love with any stock
• Know everything about the company and its
  COMPETITORS
• FUNDAMENTALS are the key to long term investing
  technical analysis is more of a short term tool
• Avoid companies with too much debt.
• Look for companies with new products that are
  gaining traction, the STORY is everything
• Know the INDUSTRY like the back of your hand
• DONT be afraid to ask for help

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Questions?