Go to Jeff Salisbury LWGate Home Page.From: AJAskey@aol.com
Subject: Re: Fundamental Philosophies (was: [CANSLIM] NXTL, SXT)
Date: Fri, 6 Dec 2002 22:57:14 EST
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- --part1_129.1ccf5d06.2b22cb9a_boundary Content-Type: text/plain; charset="US-ASCII" Content-Transfer-Encoding: 7bit Good question that I had to think about. I guess there are no absolutes I go by but there are some criteria that needs perfection elsewhere to be overlooked. 1) I require insiders to own at least 5%. This is the number WON cites and it seems like a good cut off. But I would probably buy a "perfect" stock that had 4.5% insider ownership and the insiders had just purchased 2% last quarter. 2) Growth of 25%. I look at growth so many ways with my Stock Investor Pro formulas that this does not require any one metric to be 25%. I look at 3 year average EPS and Sales growth, 3 year least-squares fit EPS and Sales growth, TTM month growth, most recent quarter growth, estimated growth for the upcoming quarter. I look for a nice trend upwards. FOSL had negative growth but the trend line was very nicely up. Since the most recent and estimated upcoming quarters are 25%+ it is on my list. 3) Cash Flow per Share (CFPS). WON suggests this should be 20% greater than EPS. This makes sense but I've seen some companies (THO for one) that were at 1.1 for CFPS but at 2.0+ for Free CFPS and Operating CFPS. I think this was a function of the way some items were recorded and THO is on my list. 4) ROE. I use a ROE equation with equity calcuated at the beginning of the period instead of the average of the TTM that is usually shown. (This is how Buffett suggests doing it and I use it to tell people I am a "value" investor - - LOL). Since this is not the ROE that IBD or MarketGuide shows, I may or may not meet the 17 as defined by others. If I see ROE is 15 but it is trending upward then I don't automatically omit the stock. One note is that stocks meeting my growth criteria rarely have an ROE less than 15 as ROE and growth are coupled in the math. 5.) I don't pay much attention to margins unless net is only 2 or 3%. I've only found hospital type stocks that have CANSLIM like growth with this low margins. Usually something with this low margins will not be growing long. Everything else is a secondary characteristic that I will overlook if the chart is great. Andy In a message dated 12/6/2002 8:33:17 AM Central Standard Time, kmalm@earthlink.net writes: > If you were to pare down WON's work, what are the absolutes? - --part1_129.1ccf5d06.2b22cb9a_boundary Content-Type: text/html; charset="US-ASCII" Content-Transfer-Encoding: 7bit <HTML><FONT FACE=arial,helvetica><FONT SIZE=2>Good question that I had to think about. I guess there are no absolutes I go by but there are some criteria that needs perfection elsewhere to be overlooked.<BR> <BR> 1) I require insiders to own at least 5%. This is the number WON cites and it seems like a good cut off. But I would probably buy a "perfect" stock that had 4.5% insider ownership and the insiders had just purchased 2% last quarter.<BR> <BR> 2) Growth of 25%. I look at growth so many ways with my Stock Investor Pro formulas that this does not require any one metric to be 25%. I look at 3 year average EPS and Sales growth, 3 year least-squares fit EPS and Sales growth, TTM month growth, most recent quarter growth, estimated growth for the upcoming quarter. I look for a nice trend upwards. FOSL had negative growth but the trend line was very nicely up. Since the most recent and estimated upcoming quarters are 25%+ it is on my list. <BR> <BR> 3) Cash Flow per Share (CFPS). WON suggests this should be 20% greater than EPS. This makes sense but I've seen some companies (THO for one) that were at 1.1 for CFPS but at 2.0+ for Free CFPS and Operating CFPS. I think this was a function of the way some items were recorded and THO is on my list.<BR> <BR> 4) ROE. I use a ROE equation with equity calcuated at the beginning of the period instead of the average of the TTM that is usually shown. (This is how Buffett suggests doing it and I use it to tell people I am a "value" investor - LOL). Since this is not the ROE that IBD or MarketGuide shows, I may or may not meet the 17 as defined by others. If I see ROE is 15 but it is trending upward then I don't automatically omit the stock. One note is that stocks meeting my growth criteria rarely have an ROE less than 15 as ROE and growth are coupled in the math.<BR> <BR> 5.) I don't pay much attention to margins unless net is only 2 or 3%. I've only found hospital type stocks that have CANSLIM like growth with this low margins. Usually something with this low margins will not be growing long.<BR> <BR> Everything else is a secondary characteristic that I will overlook if the chart is great.<BR> <BR> Andy<BR> <BR> In a message dated 12/6/2002 8:33:17 AM Central Standard Time, kmalm@earthlink.net writes:<BR> <BR> <BR> <BLOCKQUOTE TYPE=CITE style="BORDER-LEFT: #0000ff 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px">If you were to pare down WON's work, what are the absolutes?</BLOCKQUOTE><BR> <BR> </FONT></HTML> - --part1_129.1ccf5d06.2b22cb9a_boundary-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email.
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