picking stocks for your investment club

Picking Stocks for Your Club Portfolio 4/19/2011

by Doug Gerlach, [email protected] 1

Download a handout of this presentation from http://www.slideshare.net/douggerlach/

by Doug GerlachPresident, ICLUBcentral Inc.

April 2011

1


2

mailto:[email protected]

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)?

3


4







5


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?

6







7


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?

8







9


} 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.

10







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


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?

12







Small(< $500M),

25%

Mid-sized,50%

Large(> $5B),

25%

13


Email me at [email protected].

14





picking stocks for your investment club

Economy & Finance