Grading a Stock Using the NASDAQ dozen
Stock:_____________________________
Ticker:_____
Pass
Fail
http://www.nasdaq.com/investing/dozen/
Metric
Revenue
Revenue will give you an idea of how much money the company is making.
If revenue is consistently increasing, this means the company is growing.
Increasing
Decreasing
Increasing
Decreasing
Increasing
Decreasing
Buy or Strong
buy
Less than a
buy
Positive last 4
quarters
Negative any
last 4
quarters
EPS increases
EPS decreases
5 yr greater
than 8%
5 yr less than
8%
Less than 1.0
Greater than
1.0
Higher than
industry
Lower than
industry
Less than 2
More than 2
Positive net
activity for last
3 months
Negative net
activity for
last 3 months
Positive
Negative
Earnings per share (EPS)
EPS tells you how much money the company is making in profits per every
outstanding share of stock. The higher the EPS is, the more money your
shares of stock will be worth because investors are willing to pay more for
higher profits.
Return on Equity (ROE)
ROE gives us a glimpse into how efficiently company management is
producing a return for the owners of the company---based on the amount of
equity in the company.
Recommendations
If the company's future outlook is positive, the analysts recommend a "buy."
If the company's future outlook is poor, then the analysts recommend a
"sell."
Earnings Surprises
When analyzing a company's earnings surprise track record, you want to
see that the company is consistently meeting or beating its expectations.
Forecast
Look at the future earnings forecasts to insure that the future profitability of
the stock in question is strong.
Earning growth
The earnings growth number gives you an idea of how much analysts
believe earnings are going to grow per year for the next five years.
PEG Ratio
One of the more popular ratios stock analysts look at is the P/E, or price to
earnings, ratio. The drawback to a P/E ratio is that it does not account for
growth. The PEG ratio solves this problem by including a growth factor into
its calculation.
Industry Earnings
Most investors are interested not only in how much the company is earning
but also how the company's earnings compare to the average earnings of
companies in the industry.
Days to cover
Short interest is the number of shares that investors are currently short on a
particular stock. Days to cover is the number of days---based on the
average trading volume of the stock---that it would take all short sellers to
cover their short positions.
Insider trading
If managers are confident in the company, chances are good that they will
be buying stock in the company.
Weighted Alpha
Weighted Alpha is a measure of one year growth with an emphasis on the
most recent price activity. A positive Weighted Alpha indicates the stock
price is moving higher and a negative Weighted Alpha indicates the stock
price is moving lower.
Candidate for growth
Strong
Moderate
Poor
9-12 Pass
6-8 Pass
0-5 Pass