After going through all the Sectors and Industries the question of how exactly to determine the best or the worst of companies came up for me.
It is easy to determine the growth industries and sectors. But in there you still have to pick the stock and I dont care if it is a good stock moving up or a bad stock moving down. One goes long the other one goes short.
Well, on the right side we have the heat map of the different industries. Here I pick the correct industry with a 6 months performance. Either great for longs or bad for shorts.
I usually play with a few basics:
- Revenue, income from total sales of a company
- EPS, Earnings per Share.
- Total Debt to Equity Ratio, it shows you if a company actually can pay for its obligations or needs to seek financing.
- Quick Ratio for if a company can actually pay its liability without selling the house within the next 90 days..
- Operating Margin or Profit from day to day operations. Do they earn enough?
- I am also looking if a company has free Cash Flow after all deductions and taxes.
These are MY basics and there is more to go deeper. But no matter if a company is doing well or bad, the main thing is that it should move up or down. You just have to pick the right side to be on.
You can play the best against the worst in the industry, i.e. Long /Short
When you look at the screener, any screener, the information becomes overwhelming. There is just too much out there and you will get lost. I focus on a few basics and go from there. Filter them out, one by one. Then work with what is left.
Charts give to the least information. And I can say that the information displayed are just too many. You have to sort out the 3% you really need and leave the rest for the institutional trader and accountants. At the moment, in a bullish market, I am looking for great shorts. We have great longs everywhere.
I put together a few basic fundamentals I am always looking at.
https://hedgingstocks.blogspot.com/p/a-few-basic-fundamentals-i-am-always.html
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