Finance Term.txt

  1. Growth investing
    Looking for companies that are sales and earning machines, growing at least 20% a year & pushing new highs in stock price
  2. What are the growth investing key company measurements?
    • 1) Earnings increasing
    • 2) Recent stock price strength
    • 3) Low dividends bc reinvesting
  3. Where are most growth stocks traded?
  4. Value investing
    Looking for companies that are cheap
  5. What are the value investing key company measurements?
    • 1) Low P/E ratios
    • 2) Low Price-to-book ratios
    • 3) Dividend payment
  6. Two types of Analysis
    • 1) Fundamental Analysis
    • 2) Technical Analysis
  7. Fundamental analysis
    Examines the information about the company's health & potential to succeed.
  8. Technical analysis
    Examines the past behavior of the sotck price in different market conditions & attempts to prdict the stock's future price based on current & projected market conditions & trading volume
  9. Intrinsic value
    the price a stock should sell at under normal market conditions
  10. Instrinsic value measurements
    • 1) Earnings
    • 2) Assets, looking at debt
    • 3) Management history
    • 4) Price
  11. Cash Flow per Share
    The stream of cash through a business
  12. Current ratio
    Current assets over current liabilities, gauging a company's ability to pay its short-term bills.
  13. Dividend yield
    Annual cash dividend over current price, identifying bargain large company stocks
  14. Earnings per share (EPS)
    Subject to manipulation and market pressure
  15. Earnings momentum
    • Earnings acceleration or the big mo
    • A company's earnings per share isncreases quarter after at a fast rate
  16. Earnings surprises
    a company showing either higher or lower earnings per share than expected
  17. net profit margin
    • Money left over after paying all its expenses over the amount of money it had before paying expenses
    • A high margin indicates that the company has a great managers because they are controlling costs
  18. Price/book ratio
    • Indicates how much the stock would be worth if the company were liquidated
    • Less than 1 means that the price of the stock is less than the liquidation value, a good thing
  19. Price/earnings ratio
    A high P/E indicates risk because its more difficult to meet the high earnings expectations
  20. Price/sales ratio
    A good indicator because it can not be manipulated by accounting rules
  21. Quick ratio
    • Indicates the ability to deal with short-term needs
    • Cash and equivalents over its current liabilities, bigger is better
  22. Return on equity (ROE)
    • Net income over total shareholder's equity
    • A good return is anything above 20%
  23. Relative price strength
    Shows how well a stock price performed compared to the prices of all other stocks
  24. Volume
    Indicates how much interest people have in the stock, allowing to catch trends for low volume stocks
  25. 3 stock classifications
    • 1) Company Size
    • 2) Industry Classification
    • 3) Growth or Value
Card Set
Finance Term.txt
Finance Term