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Secular Trend: a very long-term trend.
Sector Funds: mutual funds specializing in a particular industry sector such as computers, or health care.
Screening: searching the entire universe of mutual funds or stocks meeting user-specified criteria.
Same Store Sales: sales at retail stores or restaurants open at least one year. A chain’s same store sales growth excludes gains due to increases in the number of stores. Same store sales growth in the 5 percent to 10 percent range is considered good.
Sales per Share: annual sales divided by the number of shares outstanding.
Sales: services and products sold by a company. Sales and revenues mean the same thing.
S&P 500: capitalization weighted index of 500 of the largest U.S. corporations.
Russell 2000 Index: the Russell 3000 is an index of the 3,000 largest US publicly traded corporations. The Russell 2,000 is a capitalization-weighted index of the 2,000 smallest companies of the Russell 3000.
Road Show: presentations made by underwriters and IPO company officials to institutional buyers to create interest in the offering.
Revenues: a company’s sales.
Return on Equity: after tax income (latest 12 months) divided by shareholder’s equity (from balance sheet).
Return on Capital (return on invested capital): after tax income (latest 12 months) divided by total of shareholder’s equity plus long term debt, plus other long term liabilities.
Return on Assets: after tax income divided by total assets.
Research and Development (R&D): costs of developing new products and services.
Relative Strength: stock price performance compared to the S&P 500, or to the entire stock market. Can measure performance over any time span, but most often uses 12 months. Relative strength is different from RSI (Relative Strength Indicator) indicator used in technical analysis.
Relative Dividend Yield: dividend yield of a stock compared the dividend yield of the S&P 500.
REIT (real estate investment trust): A special form of corporation that invests primarily in real estate. REITs do not pay federal income taxes as long as they pay out 90% of their earnings to shareholders in the form of dividends.
Redemption Fee: Fee charged when you sell a mutual fund, if you haven’t held the fund for the prescribed minimum time.
Receivables: See accounts receivable.
Real-Time Quotes: stock trading price reports that have not been artificially delayed.
Real Estate Investment Trust: see REIT
Range: high and low trade prices for the day, week, or month.
Quote: information on the last trade, and current bid and asked prices. Most quotes are intentionally delayed about 20 minutes.
Quiet Period: time after IPO, typically 25 days, when all parties involved in IPO are prohibited from commenting on the company’s future prospects. Analysts employed by underwriters are free to make buy/hold/sell recommendations after the Quiet Period expiration.
Quick Ratio: cash and cash equivalents plus accounts receivables divided by current liabilities (aka Acid Test Ratio)
Put Option: an option to sell 100 shares of a specified company’s shares at a predetermined price (also see LEAPs and call options).
Proxy Statement: material given to stockholders when the corporation solicits shareholder votes. The proxy statement usually contains details on the corporation's executive compensation plans.
Prospectus: a document circulated to potential investors prior to an IPO describing a company’s business plan.
Property, Plant and Equipment (PPE): all hard assets such as buildings, airplanes, machinery, etc.
Pro Forma Earnings: (as if) earnings without considering certain expenses such as inventory write downs, severance pay, depreciation and amortization charges, or just about anything else the company feels like excluding to make its earnings look better. Also known as core earnings, ongoing earnings, earnings excluding special items, or operating earnings.
Profit Margin: bottom line (after tax) earnings divided by sales.
Price to Sales Ratio (p/s): latest share price divided by 12-month sales per share.
Price to Earnings Ratio (p/e): latest share price divided by 12-month earnings per share (eps). Also a measure of the market's enthusiasm for a company.
Price to Book Ratio (p/b): latest share price divided by book value stated in latest report.
Preferred Stock: debt instruments. Preferred shareholders are paid ahead of common stock holders in the event the corporation is liquidated. Convertible preferred shares can be converted into common stock according to predetermined conditions.
Post-Offering Shares: the number of shares that will be outstanding after an IPO.
Portfolio: a group of stocks, mutual funds, or other securities.
Poison Pill: Steps taken by a corporation to thwart a hostile takeover attempt. For instance, a company could issue rights to purchase shares at a substantial discount after a merger, or it might issue preferred shares giving holders the right to redeem their shares at a discount after a merger.
Phase 1, Phase 2, & Phase 3: the series of FDA required tests before a new drug can be placed on the market.
PEG: price to earnings ratio divided by the forecast annual earnings growth rate. Traditionally, stocks were said to be fairly valued when the p/e and the forecast growth rate were equal.
Payout Ratio: Percentage of earnings paid out in dividends.
Payment for Order Flow: a payment made by a market maker to a broker as a thank you for directing your stock trade to that market maker.
Over-the-Counter-Market: older name for stocks traded on NASDAQ. Also refers to bulletin board and Pink Sheet stocks.
Operating Margin: operating income divided by sales.
Operating Income: sales minus all expenses except income taxes and other items not related to basic business.
Operating Earnings: not the same as operating income. See pro forma earnings.
Operating Cash Flow: surplus cash generated from company’s basic operations without regard to income tax entries such as depreciation and amortization. Changes in levels of inventories, accounts receivable and accounts payable also affect cash flow. Also see Free Cash Flow.
Open End Mutual Fund: investors buy shares directly from fund, and sell shares directly to fund. Share price is Net Asset Value (NAV).
Open: trade price of the day’s first transaction.
Normalized Earnings: profits a company can be expected to achieve taking out cyclical effects and unusual events such as one-time write-offs caused by late product releases, customer bankruptcies and the like.
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