Thread by @ms89_meet

⭐⭐ The Final Checklist ⭐⭐

⭐ Snippets by Peter Lynch ⭐

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⭐ Stocks in General:

👉 The p/e ratio. Is it high or low for this particular company & for similar companies in the same industry.

👉 The percentage of Institutional ownership.The lower the better.

👉 Insiders buying & buy-back.
Both are positive signs.

👉 The record of earnings growth to date & whether the earnings are sporadic or consistent. (The only category where earnings may not be important is in the asset play.)

👉 Strong balancesheet or weak balancesheet (debt-to-equity-ratio) & how it's rated for Financial Strength.

👉 The cash position. Net cash provides floor on the stock.

⭐ Slow Growers:

👉 Since you buy these for the Dividends (why else would you own them?)

You want to check to see if dividends have always been paid, & whether they are routinely raised.

👉 When possible find out the percentage of the earnings are being paid out as dividends. If it's a low percentage, then the company has a cushion in hard times.

It can earn less money & still retain the dividend. If it's a high percentage, then the dividend is riskier.

⭐ Stalwarts:

👉 These are big companies that aren't likely to go out of business, the key issue is price, & the p/e ratio will tell you whether you are paying too much.

👉 Diworsefications (may reduce earnings in future.)

👉 Check the company's long term growth rate, & whether it has kept up the same momentum in recent years.

👉 If you plan to hold the stock forever, see how the company has fared during previous recession & market drops.

⭐ Cyclicals:

👉 Inventories.Demand-Supply relationship. New entrants into the market,which is usually a dangerous development.

👉 Anticipate a shrinking p/e multiple over time as business recovers & investors look ahead to the end of the cycle, when peak earnings are achieved.

👉 If you know your cyclical, you have an advantange in figuring out the cycles. It is much easier to predict an upturn in a cyclical industry than it is to predict a downturn.

⭐ Fast Growers:

👉 Whether the stock is selling at a p/e ratio at or near the growth rate.

👉 Investigate whether the product that's supposed to enrich the company is a major part of the company's business.

👉 That the company has duplicated its successes in more than one city or town, to prove that expansion will work.

👉 What the growth rate in earnings has been in recent years. (20 to 25 percent range is good but 50 percenters usually are found in hot industries, & you know what that means.)

👉 That the company still has room to grow.

👉 Whether the expansion is speeding up or slowing down.

(three new shops last year & five new shops this year vs five last year & three this year)

👉 That few institutions own the stock & only a handful of analysts have ever heard of it. With fast growers on the rise this is a big plus.

⭐ Turnarounds :

👉 Most important, can the company survive a raid by its creditors? how much cash does the company have? how much debt?

👉 If it's bankrupt already, then what's left for the shareholders?

👉 Is business coming back?

👉 How the company is supposed to be turning around?has it rid itself of unprofitable divisions? this can make a big difference in earnings.

👉 Are costs being cut? it so, what will the effect be?

⭐ Asset Plays:

👉 What's the value of the assets? are there any hidden assets?

👉 Is the company taking on new debt, making the assets less valueable?

👉 How much debt is there to detract from these assets? (Creditors are first in line.)

👉 Is there a raider in the wings to help shareholders reap the benefits of the assets?

🙂⭐ End 🙂⭐