If it’s a cyclical company you’re thinking about, then your script revolves around business conditions inventories, and prices
If it’s an asset play, then what are the assets, how much are they worth?
Insiders are buying, and the company has steady earnings and there’s no debt to speak of
If it’s a turnaround, then has the company gone about improving its fortunes, and is the plan working so far?
If it’s a stalwart, then the key issues are the p/e ratio, whether the stock already has had a dramatic run-up in price in recent months, and what, if anything, is happening to accelerate the growth rate.
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These are some lessons that peter lynch thought us in one up on wall street
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STOCKS IN GENERAL
• The p/e ratio. Is it high or low for this particular company and for similar companies in the same industry.
• The percentage of institutional ownership. The lower the better.
• Whether insiders are buying and whether the company itself is buying back its own...
The best time to sell a turnaround is after it’s turned around. All the troubles are over and everybody knows it. The company has become the old self it was before it fell apart: growth company or cyclical or whatever. The shareholders aren’t embarrassed to own it again. If the turnaround has bee...
Here, the trick is not to lose the potential tenbagger. On the other hand, if the company falls apart and the earnings shrink, then so will the p/e multiple that investors have bid up on the stock. This is a very expensive double whammy for the loyal shareholders.Unlike the cyclical where the p/e...
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