Picking Stocks for Your Investment Club

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This is the handout for the April 19, 2011 "Investment Club Operations" webinar conducted by Doug Gerlach and ICLUBcentral. For more information, visit http://www.iclub.com.

This is the handout for the April 19, 2011 "Investment Club Operations" webinar conducted by Doug Gerlach and ICLUBcentral. For more information, visit http://www.iclub.com.

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  • 1. Picking Stocks for Your Club Portfolio 4/19/2011 Download a handout of this presentation from http://www.slideshare.net/douggerlach/ by Doug Gerlach President, ICLUBcentral Inc. April 2011 1 Download a handout of this presentation from http://www.slideshare.net/douggerlach/ 2by Doug Gerlach, gerlach@iclub.com 1
  • 2. Picking Stocks for Your Club Portfolio 4/19/2011 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)? 3 Download a handout of this presentation from http://www.slideshare.net/douggerlach/ 4by Doug Gerlach, gerlach@iclub.com 2
  • 3. Picking Stocks for Your Club Portfolio 4/19/2011 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? 6by Doug Gerlach, gerlach@iclub.com 3
  • 4. Picking Stocks for Your Club Portfolio 4/19/2011 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? 8by Doug Gerlach, gerlach@iclub.com 4
  • 5. Picking Stocks for Your Club Portfolio 4/19/2011 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. 10by Doug Gerlach, gerlach@iclub.com 5
  • 6. Picking Stocks for Your Club Portfolio 4/19/2011 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? 12by Doug Gerlach, gerlach@iclub.com 6
  • 7. Picking Stocks for Your Club Portfolio 4/19/2011 Download a handout of this presentation from http://www.slideshare.net/douggerlach/ Large Small (> $5B), (< $500M), 25% 25% Mid- sized, 50% 13 Download a handout of this presentation from http://www.slideshare.net/douggerlach/ Email me at gerlach@iclub.com. 14by Doug Gerlach, gerlach@iclub.com 7