How To Buy The Best Stocks At The Best TimeWhat are the 12 characteristics shared by nearly all the biggest winners in the US stockmarket over the last half century? |
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Warren Buffett Investment MethodologyWhat does Warren Buffett, the world's greatest investor, look out for in a stock? |
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Valuing A Company: PE Ratio vs Discounted Cash Flow ApproachAccounting earnings is useful for valuation only when earnings is a good proxy for the expected long-term cash flow of the company. However, not all companies generate the same cash flow for each dollar of earnings, so earnings approaches are generally only useful for very rough value approximations. The Discounted Cash Flow (DCF) approach, on the other hand, captures all the elements that affect the value of the company in a comprehensive yet straightforward manner. The DCF approach is strongly supported by research into how the stock markets actually value companies. |
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Understanding Feasibility StudiesFeasibility studies in resource projects relate not only to the physical aspects of resource recovery, but also to the economics of the project. From the very start, when consideration is given to exploration for a mineral resource, money will have to be spent. At each stage, from discovery through development to production, increasing amounts of finance will have to be committed, and at each stage it will have to be justified. |
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How Warren Buffett Exploits the Market's ShortsightednessAfter more than 45 years of actively investing in common stocks, Warren Buffett has discovered that to take advantage of the stock market's pessimistic shortsightedness, he must invest in companies whose economics will allow them to survive and prosper beyond the negative views that creates a great buying situation. What are the characteristics of the kinds of businesses Warren Buffett wants to invests in? |
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Assessing Impact of Exploration ResultsThe listed resources sector provides investors with a unique opportunity to partipate in exploration successes and a significant increase in the value of their shares that can be achieved in a relatively short time frame. The value of a company can increase many times overnight, if the initial drilling results indicate the potential for a major find. However, it takes time - with further drilling, feasibility studies and capital funding - before the discovery can be brought into production and the true value of the deposit realised. |
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Assessing Company Financial Risk using CFBCL (Cash Flow Before Tax to Current Liabilities)
The CFBCL Ratio Revealed -- The Lincoln Indicators and STOCKdoctor models calculate cashflow simply as:
CF = Net Operating Profit before Tax (Pre abnormals) + Depreciation + Amortisation
While this calculation does not include ongoing capital expenditure commitments, as many other analysts would include, my research found that using this definition of cash flow in the following equation was very useful in determining a company’s level of insolvency risk and therefore financial health.
The highly weighted ratio used in determining financial health of companies is Cash Flow before Tax to Current Liabilities: CFBCL = CF ÷ Current Liabilities
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From A Practical Viewpoint
Introduction to Financial Statement Analysis
Many investors have little or no knowledge of financial analysis, and get by quite satisfactorily without it. After all, you don’t need to be able to understand all the numbers in an annual report to know that, say, HIH or Pasminco was having difficulties. Newspapers, investment publications and stockbroker reports will tell you this, and they will often provide advice on what to do with the shares as well.
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Searching for Value using Fundamental Analysis (Part II)Value: Hiding Places
One of the keys to searching for value is knowing where to look. Likely hiding places are circumstances that suggest potential for capital gains.
Searching for value does not mean acting on the basis of rumours or hot tips. The competition to discover hiding places is intense and there are lots of big game hunters out there looking for the same quarry. The trick is to get in before the circumstances that create value are generally appreciated. Here are some examples.
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Searching for Value using Fundamental Analysis (Part I)Valuation of A Company: Value vs Price
Price and value are not the same thing. If the fair value of a share is significantly greater than its market price, then you may decide to buy it in anticipation of a capital gain. If fair value is less than market price, then you may want to sell any shares that you own or you may try to profit from an anticipated price decline by selling short.
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