The Secrets of Picking Great Growth Stocks

Why is it that bright, educated people who come across stocks that could make them wealthy for life, so frequently fail to capitalize on golden opportunities—not enough brains or education? No, not even close. Two things are responsible: Beating ourselves, and a lack of knowledge. Beating ourselves is mainly emotions, meaning too much fear or…

 

Dividend Safety Signs and Warning Flags

Many investors seek shelter from the stock market storm in more mature dividend-paying companies since the income from these firms provides at least some positive return in an otherwise bleak environment. But an economic downturn can test even the most mature and stable firms, with some forced to cut dividend payments. Others manage to maintain…

 

We May Be Getting Closer to the Bottom

The current decline has put the S&P 500 index on pace to experience an unusually bad month. Through yesterday’s close, the large-cap index was down 10.6% on a month-to-date basis. This ranks as the 27th worst calendar month, according to @OddStats. It also makes this month the toughest since February 2009, when the S&P 500…

 

The Major Approaches to the Question of Valuation

Screening a universe of common stocks down to a manageable number for further analysis leads the investor to the question of valuation: Given the market price of the common stock, is the stock correctly valued? If, in your opinion, the answer is no and you believe the stock is either overvalued or undervalued, then a…

 

Common Stock Dividends: What Are They Worth?

The thought of dividends excites some investors to a point of financial ecstasy while moving others to bouts of slumber. Some investors seek only common stocks with high and predictable dividend payments, and other investors search out stocks with exceptional growth potential, eschewing those that pay any dividend. There are a series of dividend issues…

 

Market Tips From an Observer

Covering the stock market as a broadcaster and columnist has given Dick Davis a unique perspective on the market—and investor behavior. Although these insights are over 30 years old, many of them are just as valid today as they were in 1984. Thoughts on How Adverse News Affects Stocks The first day loss may turn…

 

The Role of Leverage and Quality in Dividend Changes

Dividend increases are typically met with a positive reaction from investors, while dividend cuts are typically met with a negative reaction. Whether these changes signal positive or negative information, however, depends on the quality of the company and its leverage. Companies with low-to-moderate levels of leverage—defined as liabilities to total assets—can signal positive information by…

 

Common Stock Repurchases: A Bane or Boon to Shareholders?

Repurchases of common stock by corporations can be an attractive alternative to dividends. They may also affect share price. But what is their impact—to the corporation; to the shareholder? Many companies have been repurchasing their common stock in recent years and some can involve hundreds of millions or even billions of dollars. Investors who own…

 

Analyzing Value: The Internal Growth Rate

Earnings and dividend growth rate assumptions are a primary factor in almost all fundamental models of common stock valuation. The greater the anticipated future growth in firm earnings, the greater the stock valuation will be, assuming risk remains unchanged. But estimating earnings growth potential is difficult. Many subjective factors are considered, including the firm’s management,…

 

Computerized Investing’s New July Content

Important Note: Dear Subscriber, Starting with the September 2018 edition, Computerized Investing will be merging with the AAII Journal. Computerized Investing was originally created when computers, and using a computer to research investments, were a new option for individual investors. In today’s environment, most consider using a computer to analyze investments a necessity. As such,…