Mutual Investment Club of Cornell Week 5: Company Research Oct. 6, 2010.

Mutual Investment Club of Cornell

Week 5: Company Research

Oct. 6, 2010


Company Research

What to look for Products Financials Opportunities Threats and competition

Where to find useful resources


The Big Question

Why should I invest in this company?


Products and Services

What does the company offer? Do they have a competitive advantage? Are there growth opportunities? Do customers really need this?



Breakdown sales by category and location

Show similar products and market response

Showcase trends over past years Look at product updates and future

changes Investigate where the company can

take current products and expand



Look at competitors offerings Lots of overlap, or economic moat?

Look at necessity of product and target audience May do well in different types of markets


Financials

Three financial statements Cash flows Balance sheet Income statement

Look back over Week 2 slides Make sure to compare to previous year

and competitors


Cash Flow Statement

Focus on operating cash flow Can company support itself by operations

alone? Operating cash flow / Net sales

History of free cash flow Operating cash minus capital

expenditures More of this usually means more money to

shareholders


Balance Sheet

Snapshot of company health Assets, Liabilities and Equity

Use ratios to better understand the balance sheet Financial strength ratios Activity ratios

Want to see how company is leveraged Easy to hide information within balance

sheet Very subjective


Income Statement

Provide info on company profitability Look at margins to see how profitable

company actually is Impairment charges usually signal poor

decisions Important to track changes over time Many investors skip to EPS to judge

company’s performance


Opportunities

Read through 10-Q, 10-K for management statements Do they talk about new products or new

markets? Do they talk about competitors falling

behind? How are they going to ensure company

stays ahead? Can use industry analysis for part of

this Forecast out probable opportunities in

valuation


Threats

Look at competitors What products are they offering? How do they differentiate themselves

from your company? Where are they growing/what areas are

they pushing? Do they have sustainable economic

moats? Look at legislation International competition


Resources

Thompson One Banker Great to use for past financial information Treasure trove of research reports by

analysts FINVIZ.com

Best stock screener I’ve found Lots of options to search by

Yahoo Finance Basic company information Industry, competitor comparison


Resources

Blogs Above Average Odds Old School Value John Mauldin’s Outside the Box

Wall Street Journal Seeking Alpha SEC.gov


How to Find a Company

Read the news! Great way to get different perspectives on

companies and industries WSJ, Economist, Seeking Alpha, Yahoo

Finance Hedge fund quarterly reports

Famous investors give their take on markets and where they are putting their money


See you next week

Thanks for coming!

Mutual Investment Club of Cornell Week 5: Company Research Oct. 6, 2010.

Documents

Transcript of Mutual Investment Club of Cornell Week 5: Company Research Oct. 6, 2010.