Oklahoma Securities Commission Stock Selection by Matt Ingram Invest Ed® All Rights Reserved Oklahoma Securities Commission July 2016

Shortcut to Yahoo! Finance Research Page http://finance.yahoo.com

Yahoo! Finance, part 1 Company Profile includes Company website, getting the basics Charts We want to see where it has been; it does not affect our buy/sell decision, only the timing. New high? New low? News & Info Latest News/Press Releases: When are earnings coming out? When is the company presenting at a conference?

Yahoo! Finance, part 2 Key Statistics All the important stats are here; but if a number doesn’t make sense, there is probably a reason for it. Analyst Coverage growth rates, forecasts and opinions

Yahoo! Finance, part 3 Ownership Who owns stock inside the company, and are they buying or selling? Quotes You can download historical prices.

Stock Screener http://finviz.com/ Click Screener. Click Maps.

Descriptive Screening Filters Market Cap Dividend Yield Sector Industry Volume

Fundamental Screening Factors ROE (return on equity) PEG P/E Profit Margin Growth

An Example of Finviz Screener Let’s practice using the screener. Then you can do it on your own throughout this seminar. And you can show students how to use it. Suppose I want a firm with the following characteristics. dividend yield of greater than 3% market cap greater than $10B at least 15% ROE

Stock Screener Tips You can sort your selections. You can filter your selections even further. Look out for crazy numbers. Always verify the numbers for your selections.

Sources of Information Online: Always check the news—but which news is really important? Wsj.com, Market Data, economic news Marketwatch.com Yahoo! Finance Company’s investor relations page

Invest in Businesses You Understand Can you explain what a company does to a third-grader? Can you explain why you own a company’s stock? Do you know something about the business that Wall Street analysts might not know? Would you want to own this business if it was not publicly traded?

Learning About a Company Read the annual report—it’s propaganda, but informative. Listen to a conference call. Get your hands on independent research, from a broker, or Value Line. (available at most libraries) Beware of recommendations on TV. (CNBC)

Characteristics of Stocks I Like to Buy Earnings growth—compare growth to current P/E, so the PEG ratio matters here. Not owned by institutions or followed by Wall Street Small firms Margin of safety—if things go wrong, is there a cash or asset cushion? Think about the worst case scenario. Rising dividends (if it’s a mature firm)

Good Characteristics, cont’d. Niche industry (high barriers to entry) People have to buy their products. Uses technology to improve performance Insiders are buying shares. (Selling shares doesn’t always bother me.) Industry is out of favor (but it might be for a reason), and the balance sheet is strong.

Stocks to Avoid Beware the “next” something. Chat room recommendations (Avoid touts.) The hot stock of the moment (Everyone is talking about it.) No margin for error Lots of competition and low barriers to entry Shaky accounting (cockroach theory) P/E is well above growth forecasts.

Class Activity The Danger Zone Each group has a name of a stock. Think about the risks to this business. What could go wrong? Look at growth rates and current valuations (P/E or otherwise). Are we paying too much for the earnings?