Covering Public Companies More than 46,000 publicly traded companies in 190 countries. Governments require disclosure. Some key info is now online. Use analytic tools to find, flesh out stories. No analytic tool is as good as an authoritative inside source! Put companies in context of market, competitors. Look for angles as you compile data!

The Stock Market Higher earnings drive stock prices up Higher inflation/interest rates drive prices down Market divided into sectors, industries Market divided by growth vs. value Market divided by capitalization

Major Market Measures Major market indices: Dow Jones Industrials, Hang Seng, Nikkei, etc. See Web link to global indices Note close, change Note volume Advance/decline line often used New highs vs. new lows often used

Sector Research Sectors broken into industries Compare individual companies with their industries to find stories Web sites facilitate sector research Numerous indexes, tracking stocks represent sector movements See Web link for sector examples

Market Sectors Basic materials (chemicals, paper, metals) Consumer cyclical (cars, clothes, housing) Consumer noncyclical (food, beverages) Energy (oil, pipelines, coal) Financial (banks, insurances, brokers) Healthcare (drugs, hospitals, biotech) Industrial (airplanes, electric components) Technology (computers, semiconductors) Telecommunications (phones, wireless) Utilities (electric, gas, water)

Stock Categories Growth stocks: newer, younger, faster- growing, few pay dividends, high p/e, volatile Value stocks: older, larger, slower- growing, “overlooked,” low p/e, dividend Income stocks: stocks that pay dividends Cyclical stocks: stocks that move with the overall economy

Market Capitalization Small caps: <US$1.5 billion cap Midcaps: >US$1.5 billion, <$5 billion Large caps: >US$5 billion Market cap=number of shares times current share price Definitions change from time to time Many large caps are now small caps because of financial crash!

Stock Analysis Fundamental: Examines company’s finances, operations relative to competition. Heavy on ratio analysis. Technical: Examines company’s stock- price, trading volume, etc. for clues to future. Heavy on charting. Many investors combine the two.

Fundamental Measures Revenue and revenue growth Profits and profit expectations Levels of debt and ability to service Relative cost of shares (price/e.p.s, or PE ratio) Various measures of return on capital (e.g., return on equity) Useful in finding potential stories

Technical Measures Moving averages: breakout & breakdown Visual chart patterns: head and shoulders “Relative strength” versus an index Complex stochastics, “Bollinger bands” Volume analysis: upticks and downticks Useful for perspective, but not as solid as fundamental analysis for news purposes. See Web link for examples.

Brokerage Ratings Brokers initiate coverage, then upgrade or downgrade Recs range from buy to sell, with different jargon Sell recs are seldom issued Upgrades/downgrades can whipsaw a stock’s price

Earnings Estimates Compiled from researchers and averaged for “consensus” expectations Major estimate firms are First Call, I/B/E/S, Zack’s; spreading outside U.S. Undershooting or surpassing consensus can whipsaw stock prices More important with growth stocks

Diversify Your Sources Publicists Analysts Traders Regulators Bankers Elected officials Lobbyists Competitors Academic experts Consultants Think-tanks People affected Corporate executives Workers, labor groups