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Lesson 3: What makes a company valuable and what                                makes a stock a "Buy"?               In th...
Lesson 3: What makes a company valuable?         The Product                                                              ...
Lesson 3: What makes a company valuable?         The Product               • Who buys the product? What could affect the  ...
Lesson 3: What makes a company valuable?         Competitive Advantage         • Economies of Scale          • BrandingDep...
Lesson 3: What makes a company valuable?         Company Assets            Tangible Assets            Intangible AssetsDep...
Lesson 3: What makes a company valuable?         Company Assets               Net Assets Per Share = (Company Assets – Com...
Lesson 3: Whats the difference between a great                                company and a great stock?               Ear...
Lesson 3: Whats the difference between a great                                company and a great stock?               • T...
Lesson 3: Whats the difference between a great                                company and a great stock?          Price-to...
Lesson 3: Whats the difference between a great                                company and a great stock?                  ...
Lesson 3: Whats the difference between a great                                company and a great stock?               The...
Lesson 3: What are some other key indicators                                investors look at to value a company?         ...
Lesson 3: Whats the difference between a great                                company and a great stock?          Debt-to-...
Lesson 3: How do you find the information you need                                about companies?               • Annual ...
Lesson 3: How do you find the information you need                                about companies?             10-K Annual...
Congratulations – Lesson 3 Completed               In the next WealthLift video lesson, you will learn:               • Wh...
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How To Invest Lesson 3 - What makes a company valuable and what makes a stock a "Buy"?

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In this WealthLift Presentation, you will learn:

What makes a company valuable?
What’s the difference between a great company and a great stock?
What are some other key indicators investors look at when valuing a specific stock?
How do you find the information you need about companies?

For more tutorials, go to: http://bit.ly/KfUaUf

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How To Invest Lesson 3 - What makes a company valuable and what makes a stock a "Buy"?

  1. 1. Lesson 3: What makes a company valuable and what makes a stock a "Buy"? In this WealthLift video lesson, you will learn: • What makes a company valuable? • What’s the difference between a great company and a great stock? • What are some other key indicators investors look at when valuing a specific stock? • How do you find the information you need about companies?Depictions of persons. product names and images modeled in this video are trademarks of theirrespective owners who do not endorse and are not associated or affiliated with WealthLift Inc.©2011 WealthLift Inc. All Rights Reserved.
  2. 2. Lesson 3: What makes a company valuable? The Product Dell Inc. (DELL) – Computers and Computer Accessories General Electric (GE) – Aircraft Engines to Financial Products Bank of America (BAC) Banking & Financial ServicesDepictions of persons. product names and images modeled in this video are trademarks of theirrespective owners who do not endorse and are not associated or affiliated with WealthLift Inc.©2011 WealthLift Inc. All Rights Reserved.
  3. 3. Lesson 3: What makes a company valuable? The Product • Who buys the product? What could affect the purchase of that product? • What makes the product profitable for the company? • Scalability is importantDepictions of persons. product names and images modeled in this video are trademarks of theirrespective owners who do not endorse and are not associated or affiliated with WealthLift Inc.©2011 WealthLift Inc. All Rights Reserved.
  4. 4. Lesson 3: What makes a company valuable? Competitive Advantage • Economies of Scale • BrandingDepictions of persons. product names and images modeled in this video are trademarks of theirrespective owners who do not endorse and are not associated or affiliated with WealthLift Inc.©2011 WealthLift Inc. All Rights Reserved.
  5. 5. Lesson 3: What makes a company valuable? Company Assets Tangible Assets Intangible AssetsDepictions of persons. product names and images modeled in this video are trademarks of theirrespective owners who do not endorse and are not associated or affiliated with WealthLift Inc.©2011 WealthLift Inc. All Rights Reserved.
  6. 6. Lesson 3: What makes a company valuable? Company Assets Net Assets Per Share = (Company Assets – Company Liabilities) No. Shares OutstandingDepictions of persons. product names and images modeled in this video are trademarks of theirrespective owners who do not endorse and are not associated or affiliated with WealthLift Inc.©2011 WealthLift Inc. All Rights Reserved.
  7. 7. Lesson 3: Whats the difference between a great company and a great stock? Earnings, or profits, add long term value to a company. Earnings Per Share = Company Earnings No. of Outstanding Shares Investors look at Earnings Per Share (EPS)Depictions of persons. product names and images modeled in this video are trademarks of theirrespective owners who do not endorse and are not associated or affiliated with WealthLift Inc.©2011 WealthLift Inc. All Rights Reserved.
  8. 8. Lesson 3: Whats the difference between a great company and a great stock? • The EPS of a company is a extremely important to investors • If the company issues more stocks, each shareholder owns a smaller part of the company, in what is known as stock dilution. • Investors look for a steadily rising EPS in companies.Depictions of persons. product names and images modeled in this video are trademarks of theirrespective owners who do not endorse and are not associated or affiliated with WealthLift Inc.©2011 WealthLift Inc. All Rights Reserved.
  9. 9. Lesson 3: Whats the difference between a great company and a great stock? Price-to-Earnings Ratio (PE) Price-to-Earnings Ratio = Current Stock Price Earnings Per Share (EPS) Price-to-Earnings Ratio = $20 Stock Price $1 EPS = PE Ratio of 20Depictions of persons. product names and images modeled in this video are trademarks of theirrespective owners who do not endorse and are not associated or affiliated with WealthLift Inc.©2011 WealthLift Inc. All Rights Reserved.
  10. 10. Lesson 3: Whats the difference between a great company and a great stock? PE Ratio: 20.16 PE Ratio: 11.73 An investor pays $20.16 in Stock An investor pays $11.73 in Stock Price for every $1 of Google Price for every $1 of Walmart earnings earningsDepictions of persons. product names and images modeled in this video are trademarks of theirrespective owners who do not endorse and are not associated or affiliated with WealthLift Inc.©2011 WealthLift Inc. All Rights Reserved.
  11. 11. Lesson 3: Whats the difference between a great company and a great stock? The price paid for a company is just as important as the quality of the company Rule of Thumb: PE above 11 Market expects positive growth PE at 11 Market expects zero growth PE below 11 Market expects negative growthDepictions of persons. product names and images modeled in this video are trademarks of theirrespective owners who do not endorse and are not associated or affiliated with WealthLift Inc.©2011 WealthLift Inc. All Rights Reserved.
  12. 12. Lesson 3: What are some other key indicators investors look at to value a company? • The level of company debt, or liabilities, is very important • Debt accrues interest and increases chance of bankruptcy • Investors look at the Debt-to-Equity Ratio of a companyDepictions of persons. product names and images modeled in this video are trademarks of theirrespective owners who do not endorse and are not associated or affiliated with WealthLift Inc.©2011 WealthLift Inc. All Rights Reserved.
  13. 13. Lesson 3: Whats the difference between a great company and a great stock? Debt-to-Equity Ratio Equity = Company Assets – Company Liabilities Debt-to-Equity Ratio = Company Debt Equity Debt-to-Equity above 1 High Debt company Debt-to-Equity between 0.5 and 1 Moderate Debt company Debt-Equity below 0.5 Low debt companyDepictions of persons. product names and images modeled in this video are trademarks of theirrespective owners who do not endorse and are not associated or affiliated with WealthLift Inc.©2011 WealthLift Inc. All Rights Reserved.
  14. 14. Lesson 3: How do you find the information you need about companies? • Annual and Quarterly reports of companies • These reports are required by the Securities and Exchange Commission (SEC) • All reports are available online at the SEC Edgar Database • 10-K Annual Report is the most important document released by a companyDepictions of persons. product names and images modeled in this video are trademarks of theirrespective owners who do not endorse and are not associated or affiliated with WealthLift Inc.©2011 WealthLift Inc. All Rights Reserved.
  15. 15. Lesson 3: How do you find the information you need about companies? 10-K Annual Report contains:  Income Statement Company revenues and expenses  Cash Flow Statement Company cash flows  Balance Sheet Company assets and liabilitiesDepictions of persons. product names and images modeled in this video are trademarks of theirrespective owners who do not endorse and are not associated or affiliated with WealthLift Inc.©2011 WealthLift Inc. All Rights Reserved.
  16. 16. Congratulations – Lesson 3 Completed In the next WealthLift video lesson, you will learn: • What is "Discounting”? • How do I use discounting to find undervalued stocks? • What is a margin of safety?Depictions of persons. product names and images modeled in this video are trademarks of theirrespective owners who do not endorse and are not associated or affiliated with WealthLift Inc.©2011 WealthLift Inc. All Rights Reserved.

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