USING THE PERT Part 2 Created by James Hurt

What We Will Cover Last Month –Why use PERT –How to set up a portfolio using Toolkit This Month –How to read and use the PERT Next Month –Trend Report –Portfolio Summary

Why Use PERT If diligent use of the Stock Selection Guide can help you pick four out of five winners, then the PERT is the first line of defense in keeping the one out of five that might be a loser from damaging your portfolio.

What Does the PERT Tell Us? The information on the PERT can be broken into three categories: –the stock’s dividend and yield –the trend of each company’s performance –an assessment of each stock’s potential.

PERT Columns one and three tell us the current Dividend and Yield of each stock. Column two is the Name of the Company. The default for all PERTS is to sort on the Company name. Column four is the Estimated EPS.

How to Enter a Different Estimated EPS From PERT page, pick Options the Enter Estimated EPS Pick a company, enter data at bottom of form. Pick “Calculated” to restore your SSG projection.

PERT Columns 5, 6, 7, and 8 are the heart of the PERT They give the percentage difference in four key fundamental areas: –EPS –Sales –Pre-Tax Profit –Trailing 12 month EPS The first line is the most recent quarter. The second line is a year ago quarter. The third line is the percentage change.

PERT Problem areas are highlighted in pink Numbers printed in red are estimates.

PERT Columns five through eight will often be your first warning of a potential serious problem. Pay close attention to the percentage change in pre-tax profit. This is often the first indicator of a future down-trend in earnings.

PERT Also be sure and compare the Trailing 12 Month EPS (Column 8) with your EPS Estimated Growth Rate (Column 13). A negative number or serious disappointment should be investigated.

PERT Although Columns 9 and 11 are labeled Current P/E and Current Relative Value, they are really the Projected P/E and Projected Relative Value. They are calculated using the projected earnings.

PERT The last six columns allow us to assess the potential growth of each stock. These numbers are based on our judgment and projections on the SSG. Reviewing our SSGs at least once a year makes the PERT more meaningful.

Sorting Data There are thirteen different items on which you can sort the data and they can be sorted in ascending or descending order.

Why Sort Temptation is to sort so best are on top. Best use of PERT is to sort so worst are on top. –These are the companies in your portfolio you want to carefully watch

Next Month Next month we will discuss the other two parts of the PERT – Trend Report. –Portfolio Summary.