Our commentary here should not be considered as research, nor should it be viewed as an invitation to buy or sell any securities.
We have enough to worry about, so please don’t make any investments based on anything you read on any board, especially this one.
Welcome to random thoughts on how to play the big board stocks!!!!
disclaimer: Tim is a very close personal friend of mine.
At times, there will be (you will see) posts which look/sound
somewhat disparaging between us. PAY NO attention....we both
have very dry sense of humor and LOVE to PROD each other often.
The Big Board (BIGB) is a forum for the discussion of National Market Listed Stocks and the National Markets in general. The focus will be on stocks trading on the Nasdaq National Market, the NYSE and the AMEX. Additionally, this forum will focus on long-term investing strategies in blue chip stocks as well as swing trades in high volume stocks. Also, focus should be on mid to large cap stocks:
Big/large cap - These companies have a market cap between $10-$200 billion. Many well-known companies fall into this category, which includes names like Yahoo, IBM and Citigroup. Typically, large-cap stocks are considered to be relatively stable and secure. Both mega and large cap stocks are often referred to as blue chips.
Mid cap - Ranging from $2 billion to $10 billion, this group of companies is considered to be more volatile than the large and mega-cap companies. Growth stocks represent a significant portion of the mid caps. Some of the companies might not be industry leaders, but they are well on their way to becoming one.
We asked a few Ihubbers "what do you look for in making buying decisions on "large cap" / big board stocks ?"
1. look for similar stocks as Warren B. Good earnings for years, good management, a leadership, almost like monopoly in a sector and I prefer a strong, increasing dividend. Good luck to you both with your board. I was just there, it reads well.
2. Warren Buffet's annual newsletters are always a good source for pithy comments on investing. Buffet always makes it sound easy (and maybe it is for him) but what to look for is always easier to point out than actually finding it is. Buffett always starts by sitting down with the most recent 10k for a company he is considering and reading it cover to cover. The key thing I look for when starting out is the potential for future growth in a company. The hard part is divining which company in a field of competitors will get the leg up on the others. Growth is always the factor that drives the stock price and makes the shareholder money. It also depends on whether you are looking for a long term hold or something to swing trade for a few months or a couple of years.
3. Then you need to do some real research (not reading company PRs and message board crap) and find some companies to invest in that have real potential. Stop trying to be a millionaire overnight with a $10,000 investment. Just like in real life, if you don't hang around with crooks and drug addicts, you don't have to worry about the police showing up at your house with a search warrant. Try associating with a better class of companies and get away from the bottom feeders.
4. keep an eye on the economy and seasons. best opportunities for short term gains on big boards are the day of an upgrade and thru the next 2 days. compare with other Stocks in the Same Sector .... Look for REAL bad/and or fairly-good news on the Stock ... Lots of Downgrades/Upgrades ... 'TRADER, go the Opposite direction' .... Lots of Volume .... then, just-MAY be time to 'Accumulate' Remember ACCUMULATE
5. The old story about the people who made the real money in the California gold rush being those who sold the picks and shovels and not the miners is still true today. If you are generally aware of what is going on in the economic world then the companies to look at are always evident.
6. For Intermediate Term Large Cap Buy and Hold
> Dividend above 3%
> Must be Profitable company
> Best Buys with price/earnings between 13 and 18
> Daily Volume preferably above 3 to 5 million shares
> Has potential "Sex Appeal"
7. Low P/E, Earnings growth, dividend is a plus factor. Not necessary, but a plus. History of frequent dividend increases.
Finally, it is really nice if there is some bad news and a really good company that meets the above gets trashed by the market for some explainable reason. Sometimes it is because they made a bad business decision that won't be fatal, so being patient, I can wait for the company to rebound
8. look for the not-so-rare market over-correction, Then seek out those great companies whose p/e and peg ratios got hit too hard, relative to the rest of the market reaction. In a hum-drum market, look for much of the same, but go the extra mile, and look at what they are doing in the market. Example: AVR had issued a high-yield bond. As soon as they did this, I bought in HEAVILY... here's why: if they can make a case in front of major banking institutions to sell these bond at a high yield, the AVR must be expecting huge retuns as a result. AVR climbed 17% last week in no time.
Based on our survey- I would say most folks look at these 10 areas (and I'll post my criteria in ()):
1. Low P/E (under 15)and profitable.
2. Dividend (more than 1%)
3. Price to book ratio (under 5x book)
4. Debt to equity (1 or less to make sure they can manage the debt)
5. Short interst (less than 3%, more than that means something is wrong)
6. Institutional holdings (20% or more)
7. Sector/industry/economic (diversify, and know the reasons you want in the stock)
8. Management (quality dudes, that are not overpaid)
9. Revenue growth (20% or more)
10. The chart (look for turn around situations, trading above the 20 day average and a 10% window to resistance)
I think if a stock meets 7 of these 10 areas, and you don't find any skeletons in the filings (i.e. legal problems)- should be a good investment, imo.