FA help...

[IIC]

You could look at ROE...But what about companies that are great at leveraging?...


I screwed up...When I made the comment about leveraging I should have really been talking about Debt. High debt is not always bad...Think of it as good debt or bad debt.

If a co. borrows money for continuing operations...generally that would be bad...If they borrow money for new equipment which will produce more products in less time at a cheaper unit cost that could be good...assuming they can sell the increased number of units.

Also...margins...vary quite a bit from industry to industry...so I don't think you can use one standard %...Doug

[Rob]

EPS Growth

DXPE- possible long signal over 46.00
FTEK- last signal long was 15.30 on 6/01/06 stock up 8% since signal.
CWTR- looks like a short. Price is wedging up
ARXT- is in trend acceleration mode and near all time highs. A push over 49.83 could get interesting with the break out players.
LCAV- looking for gap support to hold.
NIHD- working on first higher low. No entry yet
BJS- looks like a short. Price is wedging.

Runner, I took your above list and created some graphical representations of their earnings (per share) growth over the past 8 quarters, expressed as percentages. These are quarter-over-quarter figures. The source for the numbers is MSN's Moneycentral Web site. A N/A on the source table translates to a 0%. (ARXT had quite a few N/A's.)

As you can see, some of the highest in terms of pct. avg. also have a great deal of volatility. I like to look at stuff like this. Thought I'd toss it out there for your perusal.

Edit: Just for grins and giggles, I did a graph on Google's earnings the same as with those above, and this is what resulted:

[Runner]

Hey Rob cool charts you have there. Looks like some of then might be slowing down.

[Runner]

Not sure about this but here is one way of looking at it http://www.hussmanfunds.com/wmc/wmc060605.htm

[mrmarket]

Stock scouter gives you a good fundamental snapshot of some companies so you can quickly separate wheat from chaff:

http://moneycentral.msn.com/investor/srs/srsmain.asp

[Runner]

Not sure about this but here is one way of looking at it http://www.hussmanfunds.com/wmc/wmc060605.htm

Hey thanks for the link MM. Now explain how to separate the wheat from the chaff? MM what is your comments on this guys write up pertaining to earnings growth?

[studentofthemarket]

I must be sounding like an idiot but this is all new to me.

If this is all new to you, you need to take a breath and do some reading before you launch.

I would suggest you read.

Peter Lynch's first book
small stocks big profits, I think Perritt is the author
the Market Wizards books by Jack Schwager<sp>

Just to point out a few books I thought were interesting in the past.

I read many books before I formulated my current system. And that doesn't include my time spent on the Investor's Forum on CompuServe back in the preinterenet days. or Business Week, The Economist, IBD, etc.

Good Luck

[mrmarket]

Ok Guys I’m seeking some FA advise from the HUGE Mr. M’ers. I have a scottrade account and need to put this to work for a longer term type investing.

I do not have a clue on fundamental reasons why one should buy. I know earnings growth, PE, things and that is about all. I welcome your insight on some of these picks. Not interested in the TA stuff on these picks. I’m interested in why they might or might not be a good investment…


LVS NTRI DXPE HANS ARXT BJS FTEK FCL BUCY ISRG NIHD CWTR NSR..

For starters, I only like stocks that have shown 3 consecutive years of revenue and earnings growth. That means the only stocks I would consider are: NTRI, DXPE, HANS, BJS, FCL, CWTR and NSR. That doesn't mean that the other stocks aren't good investments, but its my way of weeding out stocks that are likely to continue to be good earners, which is the most important quality of stock price enrichment. More in a little while...

[Runner]

Well these FA stocks did not fare well today. Nothing did to hot anyway. Thanks MM for the info on 3 years of revenue and earnings growth.

Looking over my FA scan I noticed a few changes. CTSH SII RES NBR GOL have been added today.

[Runner]

Hey MM, I was just thinking about a stocks PE. What is considered to high? I was thinking this. Now if a stocks PE is real high and it disappoints the boys on the street this may have a seriously negative effect on this stock, thus resulting in a nice splash down.

[Runner]

Deep Poop!

…..And you thought you had a bad day.. Check out this paratrooper as he prepares to conduct a PLF (parachute landing fall)...

[mrmarket]

Hey MM, I was just thinking about a stocks PE. What is considered to high? I was thinking this. Now if a stocks PE is real high and it disappoints the boys on the street this may have a seriously negative effect on this stock, thus resulting in a nice splash down.

Absolutely...and conversely if a stock has a very low P/E it's not to far to fall. Empirical studies done on the entire market have proven that low P/E stocks outperform high P/E stocks

I like lower P/E stocks. I'll only buy a high PE stock if its earnings AND revenue growth are accelerating.

[mrmarket]

Well these FA stocks did not fare well today. Nothing did to hot anyway. Thanks MM for the info on 3 years of revenue and earnings growth.

Looking over my FA scan I noticed a few changes. CTSH SII RES NBR GOL have been added today.

Runner..if you're using FA as your guide, what a stock does in a day, a week or a month really doesn't mean anything. What you have determined is that a stock is undervalued, relative to the market, and that eventually it will find its appropriate valuation.

[mrmarket]

Ntri

When you look at NTRI, the first thing you see is its explosive revenue and earnings growth in the most recent quarter. The market loved it, driving its stock up to a PE of 60.

I tend to favor this stock because its stock price has been trending up for a 2 year period, meaning that it is not exactly a flash in the pan. But the question you have to ask is if its earnings growth will continue in order to support a valuation of 60? What's so special about their product, basically dried yucky food that people store in their closets for years.

So I guess I'm saying with NTRI, I just don't see it. It may indeed continue to go up, but why take a risk?

[mrmarket]

Dxpe

Now DXPE is a Mrmarket stock which I really like. It's in a nice boring industry that will grow with the economy, which seems to be doing well right now.

While it's trailing PE is kind of high (36), if you look at its projected PE of 18, it is very reasonably priced. If you look at its return on assets (ROA) of 11.5% and its return on equity (ROE) of 37%, it's easy to see how it will be able to sustain its impressive revenue and earnings growth.

You have to watch its balance sheet, since they have levered up a bit to support their infrastructure growth, but if you look at their cash flow you'll see that this debt is covered.

Put a check mark next to DXPE.