Personality-Driven Portfolio by Sam Phoen

Author:Sam Phoen
Language: eng
Format: epub
Publisher: Marshall Cavendish International

Some other objective selection criteria might be:

a. Volatility of the company’s growth – How volatile is its growth? Is the stock really a growth stock or is it a stock that’s rebounding from a loss or low revenue/profit situation?

b. Liquidity of the stock

c. Market Capitalisation of the stock (for a sense of the risks)

It is preferable to have a slightly longer list of stocks to apply the above further subjective and objective criteria to, to ensure the final shortlist is one that you have run through in sufficient detail and are more confident in.

(b) Value Stocks

There are stocks that present Absolute Value, and those that have Relative Value. Absolute Value stocks are stocks that are cheap based on their own fundamentals. Relative Value stocks tend to be stocks that are cheap relative to their peers or other companies operating within the same industry or sector, but not necessarily cheap compared to their own history or fundamentals.

Absolute Value stocks are harder to come by, especially in a bull market, as most stocks tend to move up to some degree. Relative Value stocks can always be found, and tend to be exploited by long-short managers who buy the under-valued stock while at the same time shorting the relatively over-valued stock.

There are numerous ways to filter value stocks. Some common objective criteria that could be applied include:

a. Price/Earnings < x, or Enterprise Value/EBITDA < x (x ideally single digit)

b. Price/Book Value < x (x ideally below 1)

c. Debt/Current Asset < x (used to estimate the liquidity of the company)

d. Positive earnings per share growth over the last x years

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.