Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: RE: Fundamental Philosophies (was: [CANSLIM] NXTL, SXT)
Date: Sat, 7 Dec 2002 11:24:37 -0600
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Hi Andy,
A quick question for you. Much of what you've listed here shows that you are
looking for certain things in combination *after* you have identified a
candidate. What do you then use as absolutes to identify a potential candidate
from which you then look at the criteria you have listed?
Katherine
-----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of AJAskey@aol.com
Sent: Friday, December 06, 2002 9:57 PM
To: canslim@lists.xmission.com
Subject: Re: Fundamental Philosophies (was: [CANSLIM] NXTL, SXT)
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?
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<DIV><SPAN class=3D104112317-07122002>Hi Andy,</SPAN></DIV>
<DIV><SPAN class=3D104112317-07122002></SPAN> </DIV>
<DIV><SPAN class=3D104112317-07122002>A quick question for you. Much of =
what=20
you've listed here shows that you are looking for certain things in =
combination=20
*after* you have identified a candidate. What do you then use as =
absolutes to=20
identify a potential candidate from which you then look at the criteria =
you have=20
listed?</SPAN></DIV>
<DIV><SPAN class=3D104112317-07122002></SPAN> </DIV>
<DIV><SPAN class=3D104112317-07122002>Katherine</SPAN></DIV>
<BLOCKQUOTE>
<DIV class=3DOutlookMessageHeader dir=3Dltr align=3Dleft><FONT =
face=3DTahoma=20
size=3D2>-----Original Message-----<BR><B>From:</B>=20
owner-canslim@lists.xmission.com=20
[mailto:owner-canslim@lists.xmission.com]<B>On Behalf Of=20
</B>AJAskey@aol.com<BR><B>Sent:</B> Friday, December 06, 2002 9:57=20
PM<BR><B>To:</B> canslim@lists.xmission.com<BR><B>Subject:</B> Re: =
Fundamental=20
Philosophies (was: [CANSLIM] NXTL, SXT)<BR><BR></FONT></DIV><FONT=20
face=3Darial,helvetica><FONT size=3D2>Good question that I had to =
think=20
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=20
insiders to own at least 5%. This is the number WON cites and it =
seems=20
like a good cut off. But I would probably buy a "perfect" stock =
that had=20
4.5% insider ownership and the insiders had just purchased 2% last=20
quarter.<BR><BR>2) Growth of 25%. I look at growth so many ways =
with my=20
Stock Investor Pro formulas that this does not require any one metric =
to be=20
25%. I look at 3 year average EPS and Sales growth, 3 year =
least-squares=20
fit EPS and Sales growth, TTM month growth, most recent quarter =
growth,=20
estimated growth for the upcoming quarter. I look for a nice =
trend=20
upwards. FOSL had negative growth but the trend line was very =
nicely=20
up. Since the most recent and estimated upcoming quarters are =
25%+ it is=20
on my list. <BR><BR>3) Cash Flow per Share (CFPS). WON suggests =
this=20
should be 20% greater than EPS. This makes sense but I've seen =
some=20
companies (THO for one) that were at 1.1 for CFPS but at 2.0+ for Free =
CFPS=20
and Operating CFPS. I think this was a function of the way some =
items=20
were recorded and THO is on my list.<BR><BR>4) ROE. I use =
a ROE=20
equation with equity calcuated at the beginning of the period instead =
of the=20
average of the TTM that is usually shown. (This is how Buffett =
suggests=20
doing it and I use it to tell people I am a "value" investor - =
LOL). =20
Since this is not the ROE that IBD or MarketGuide shows, I may or may =
not meet=20
the 17 as defined by others. If I see ROE is 15 but it is =
trending=20
upward then I don't automatically omit the stock. One note is =
that=20
stocks meeting my growth criteria rarely have an ROE less than 15 as =
ROE and=20
growth are coupled in the math.<BR><BR>5.) I don't pay much =
attention to=20
margins unless net is only 2 or 3%. I've only found hospital =
type stocks=20
that have CANSLIM like growth with this low margins. =
Usually=20
something with this low margins will not be growing =
long.<BR><BR>Everything=20
else is a secondary characteristic that I will overlook if the chart =
is=20
great.<BR><BR>Andy<BR><BR>In a message dated 12/6/2002 8:33:17 AM =
Central=20
Standard Time, kmalm@earthlink.net writes:<BR><BR><BR>
<BLOCKQUOTE=20
style=3D"PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #0000ff 2px =
solid; MARGIN-RIGHT: 0px"=20
TYPE=3D"CITE">If you were to pare down WON's work, what are the=20
=
absolutes?</BLOCKQUOTE><BR><BR></BLOCKQUOTE></FONT></FONT></BODY></HTML>
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