picking stocks for your investment club
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Picking Stocks for Your Club Portfolio 4/19/2011
by Doug Gerlach, gerlach@iclub.com 1
Download a handout of this presentation from http://www.slideshare.net/douggerlach/
by Doug GerlachPresident, ICLUBcentral Inc.
April 2011
1
Download a handout of this presentation from http://www.slideshare.net/douggerlach/
2
Picking Stocks for Your Club Portfolio 4/19/2011
by Doug Gerlach, gerlach@iclub.com 2
Download a handout of this presentation from http://www.slideshare.net/douggerlach/
1. Has company grown sales & EPS consistently?2. Has company grown sales & EPS strongly
relative to its size?◦ Small companies grow more quickly than large.
3. Are you confident that company can grow sales & EPS at acceptable rate over next 5 years?
4. What are the primary drivers of growth (tailwinds)?
5. What are key obstacles to growth that should be monitored (headwinds)?
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Download a handout of this presentation from http://www.slideshare.net/douggerlach/
4
Picking Stocks for Your Club Portfolio 4/19/2011
by Doug Gerlach, gerlach@iclub.com 3
Download a handout of this presentation from http://www.slideshare.net/douggerlach/
5
Download a handout of this presentation from http://www.slideshare.net/douggerlach/
6. Are pre-tax profit margins consistent or growing?7. Are pre-tax profit margins above average compared
to industry & peers?8. Are you confident company can maintain or expand
pre-tax profit margins over next 5 years?9. What are primary drivers of margin expansion
(tailwinds)?10. What are problems that would cause margins to
contract (headwinds)?11. What competitors should be reviewed & monitored?
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Picking Stocks for Your Club Portfolio 4/19/2011
by Doug Gerlach, gerlach@iclub.com 4
Download a handout of this presentation from http://www.slideshare.net/douggerlach/
7
Download a handout of this presentation from http://www.slideshare.net/douggerlach/
12. Is company currently selling below or close to Average P/E Ratio (Relative Value <~100%)?
13. Is company currently selling below or close to its Projected Average P/E Ratio?
14. At current price, can purchase support potential 15% total return with >3 times upside to downside?
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Picking Stocks for Your Club Portfolio 4/19/2011
by Doug Gerlach, gerlach@iclub.com 5
Download a handout of this presentation from http://www.slideshare.net/douggerlach/
9
Download a handout of this presentation from http://www.slideshare.net/douggerlach/
} You may often adjust future expected High & Low P/E Ratios below historical levels.
} Proj Avg P/E = (Sel High P/E + Sel Low P/E)/2} How does Current P/E compare?
◦ Should be close or lower.
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Picking Stocks for Your Club Portfolio 4/19/2011
by Doug Gerlach, gerlach@iclub.com 6
Download a handout of this presentation from http://www.slideshare.net/douggerlach/
15. How does current & near-term economic climate affect this company’s business?
◦ Is company cyclical or adversely affected by economic slowdowns?
16. How stable & competent is company’s board & management team?
◦ How long has key management been in place?◦ Are insiders buying or selling?◦ Is board diverse & independent?
17. Are there poorly performing holdings that should be sold or replaced in your portfolio?
11
Download a handout of this presentation from http://www.slideshare.net/douggerlach/
18. How does the size of this company fit with other holdings?
◦ Do not overload on large company stocks.19. How does industry group of company fit
with other holdings?◦ Diversify by industry group.
20. Would buying this company improve the overall quality & return of portfolio?
◦ Is there a weaker holding you can replace with this stock?
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Picking Stocks for Your Club Portfolio 4/19/2011
by Doug Gerlach, gerlach@iclub.com 7
Download a handout of this presentation from http://www.slideshare.net/douggerlach/
Small(< $500M),
25%
Mid-sized,50%
Large(> $5B),
25%
13
Download a handout of this presentation from http://www.slideshare.net/douggerlach/
Email me at gerlach@iclub.com.
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