Daily Interests & Criteria
My Daily Interests are reports of recent market performers who have established price movement, benefited from market attention to their recently released interim/annual financial reporting, in the face of expectations, or companies who have launched new products/segments/opened new markets. Each are fundamentally considered for the movement in their price as to what the market was expecting from them. The Report consists of lists of 4 to 6 TSX/NYSE/NASDAQ stocks that were picked for their ability, with this, to gain considerable returns in the mid/long-term. If it’s news that affects the company, and starts a material impact on its price going forward, it’s considered for inclusion in the Daily Interests.
Lyndon’s Criteria for Evaluations
To let you know how I come to my conclusions as to whether a company is a good candidate to invest in, I consider the following. I don’t look for “doubling, tripling, …” etc. but only look for large percentage growth over the mid/long-term of 6 months to 1 year. Every stock I buy I set a window for this growth.
Good Earnings calls allow a company to generate returns that are not too much of a negative surprise to their investors. Notwithstanding this, short periods of time after poor earnings call can also be good times to invest, after the stock has been punished, since the company may have had only a short-term problem and since they are still a going-concern, they can work it out, creating improvement in the stock price.
On-going Earnings Improvement shows that the company has the discipline to control its costs and exploit its revenue opportunities. These are evident in improving NI, (not just EBITDA since over the going-concern long-term a company must finance its assets and pay its taxes), whether it is improving, in the case of negative earnings, or increasing.
New Significant Product/Market Penetration reveals that the company has just, materially, improved its chances of generating additional contributed margin by pursuing these, which always enhances a company’s outlook. Mind you, there can be risk associated with this since even though it has occurred there is no guarantee that it will profitability work out. Some qualitative aspects are to be considered here such as size of market, launch roll-out, existing competition, actual contributed margin possible, etc.
Liquidity to Exploit and Stay a Going-Concern shows where they have net assets above liabilities that allow them to continue to finance their operations – whether they have a good buffer to rise above any market shifts and adapt to them. I prefer companies who are self-financed obviously and not having to “go back to the trough” to get more external financing.
Good Insider Ownership reveals that those who are employed by the company have some skin-in-the-game themselves and know that they are performing well, and that they stand to lose if they don’t, personally.
Institutional Ownership reveals that funds have considered their stock and feel that they are an adequate investment over the long-term. High institutional investment says that these companies have “passed the test” of having both good fundamentals for their product/market position and the financial ability to stay a going-concern and perform as per the institutional investor’s objective.
Movement in Stock Price in the Past and Ongoing Trading Volume will tell us where the stock has been based on all the above factors and is a reasonably good predictor of where it will be in the mid/long-term. This will tell us whether it’s a good buy at present pricing and whether it’s overhyped.
An Evaluation of Analysts’ Opinions is sometimes good but I’ve found that they don’t always dwell on the internal mechanics in an opinion on a stock so I don’t spent an enormous amount of time with them – they can be both right and wrong, though it can be interesting to see them clash.
The above, in a nut-shell, is how I look at each stock candidate, as you should as well.
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My Daily Interests are reports of recent market performers who have benefited from market attention to their recently released interim/annual financial reporting, in the face of expectations, have favourable longer-term price movement, or companies who have launched new products/segments/opened new markets.