A Structured Approach to Investing using Toolkit 6

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A Structured Approach to Investing using Toolkit 6

  1. 1. An Introduction to Toolkit 6Doug Gerlach - A Structured Approach to Stock Analysis October 2009 A Structured Approach to Analyzing Company Fundamentals with Toolkit 6 Presented by Doug Gerlach President, President, ICLUBcentral gerlach@iclub.com http://www.iclub.com 1 About Our Stock Analysis Software • For investors, not traders investors, • Based on premise that companies that increase EPS will eventually see share prices grow • Uses fundamental, long-term analysis long- • Based on identifying underlying characteristics of growth and quality • Provides framework for structured sell decisions 2 1 by Doug Gerlach, gerlach@iclub.com
  2. 2. An Introduction to Toolkit 6Doug Gerlach - A Structured Approach to Stock Analysis October 2009 Program History • Long legacy of development: – Version 1.0 released in 1991 – Version 6.0 released in 2008 – Version 6.4 released in 2010 3 What’s New in Version 6? • Streamlined toolbar • Smart data updater alerts you when • Mini SSG graphs pop up in library & new data is available Comparison header • Preference to use beginning year, ending year, or average equity in ROE • Additional graphing: free cash flow, • Display & print “preferred procedure” book value, net income, debt, shares on SSG graph outstanding, dividends • Display Quality & Sector in SSG header • Plot future FY EPS & Sales estimates on • EPS & Sales growth R2 displayed on graph Page 1 • “Default Judgment” applies conservative • Integrated web links never out of date values to all judgment items • Read community messages about your • 25/50/25 zoning now default stock on StockCentral message boards • Display debt/equity trend in Section 2 • Section 3 “Additional Items” better • Use 10-year P/E Ratios by default 10- organized • Additional Low Price Options • Implied growth rate displayed on EPS 4 Growth judgment window 2 by Doug Gerlach, gerlach@iclub.com
  3. 3. An Introduction to Toolkit 6Doug Gerlach - A Structured Approach to Stock Analysis October 2009 New for StockCentral Subscribers • “First Impression” screen when you load a new company • Complete Roster displayed as portfolio, automatically downloaded each week into program • Upload completed studies to StockCentral for peer review • Take Stock EPS growth rate estimate displayed on EPS Growth Judgment window • Take Stock Quality Rating displayed in SSG page header 5 3-Step Approach to Analysis 1. Assess Company Growth – Strength & consistency of past EPS growth – Determine likely future EPS growth 2. Review Company Quality – Stability of margins, ROE, debt 3. Determine Valuation 6 3 by Doug Gerlach, gerlach@iclub.com
  4. 4. An Introduction to Toolkit 6Doug Gerlach - A Structured Approach to Stock Analysis October 2009 1. Assess Growth • Focus on operating earnings (eliminate non- non- recurring events). • Is historical growth of EPS & Sales consistent? – Review R2 at bottom of Stock Study. • Is historical growth strong enough for size of company? 7 Project Future EPS • What is likely future EPS growth for company? • Incorporate external information with your own judgment: – Long- Long-term analyst estimates – Near- Near-term analyst estimates – Implied (sustainable) growth rate – Company guidance – Other research 8 4 by Doug Gerlach, gerlach@iclub.com
  5. 5. An Introduction to Toolkit 6Doug Gerlach - A Structured Approach to Stock Analysis October 2009 Refine Your EPS Estimate • Construct Revenue-Based EPS Model Revenue- (streamlined analyst technique). 9 2. Review Company Quality • Review Trend and Average of: – Pre-Tax Profit Margins Pre- – Return on Equity – Debt to Equity • Compare to Industry Averages & Peers. 10 5 by Doug Gerlach, gerlach@iclub.com
  6. 6. An Introduction to Toolkit 6Doug Gerlach - A Structured Approach to Stock Analysis October 2009 3. Determine Valuation • Review Historical P/E Ratios & Yield. • Determine likely ranges of P/E Ratios in future, given assumed company growth rate. 11 Analyze Reward & Risk • Not enough to buy a good company, must buy at right price. • Is there enough reward compared to risk if purchased at current price? 12 6 by Doug Gerlach, gerlach@iclub.com
  7. 7. An Introduction to Toolkit 6Doug Gerlach - A Structured Approach to Stock Analysis October 2009 Total Return Analysis • Does Projected Total Return (from dividends, price appreciation, P/E expansion) meet your objectives? 13 Library & Portfolio • Save stock studies to library • Export stock study in *.SSG format to share with other users • Create & manage multiple portfolios • Create & manage multiple libraries 14 7 by Doug Gerlach, gerlach@iclub.com
  8. 8. An Introduction to Toolkit 6Doug Gerlach - A Structured Approach to Stock Analysis October 2009 Manage Your Portfolios • Portfolio Report Card provides: – Overview of fundamentals of current holdings. – Access to deeper evaluation. – Eliminates need for old-fashioned & old- complicated paper forms. 15 Portfolio Overview • Metrics on state of holdings. • Overview of key metrics for each stock. 16 8 by Doug Gerlach, gerlach@iclub.com
  9. 9. An Introduction to Toolkit 6Doug Gerlach - A Structured Approach to Stock Analysis October 2009 Portfolio Alerts • Knowing when to sell: – Defense: Get early warning signals if Defense: conditions change for the worse. – Offense: Sell holdings with limited upside Offense: potential. 17 Challenge Existing Holdings • Don’t merely sell – replace holdings with prospects that offer higher quality/better returns. • Consistently strive to upgrade your portfolio. 18 9 by Doug Gerlach, gerlach@iclub.com
  10. 10. An Introduction to Toolkit 6Doug Gerlach - A Structured Approach to Stock Analysis October 2009 Portfolio Reports • Provide more information. • Are current holdings indicated as potential buys? • Are fundamentals deteriorating? 19 Additional Features • Quarterly trend analysis. • Graph additional items. • Compare stocks. 20 10 by Doug Gerlach, gerlach@iclub.com
  11. 11. An Introduction to Toolkit 6Doug Gerlach - A Structured Approach to Stock Analysis October 2009 Data Sources • Can enter historical data by hand. • Or subscribe to data feed: – BetterInvesting/S&P – StockCentral.com/Morningstar – AAII/Reuters (CD-ROM only) (CD- – Value Line (CD-ROM only) (CD- 21 For More Information • Download a free 30-day demo at 30- http://www.iclub.com/tk6/ • Call 1-877-33-ICLUB 1-877-33- • Buy at today’s event and save off full retail price! 22 11 by Doug Gerlach, gerlach@iclub.com
  12. 12. An Introduction to Toolkit 6Doug Gerlach - A Structured Approach to Stock Analysis October 2009 Learn why Toolkit is the world’s most popular software for fundamental analysis of stocks! 23 12 by Doug Gerlach, gerlach@iclub.com

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