Today I offer up a Net Net stock Endwave (ENWV). In an effort to bring choices to beginning and small time investors I will be presenting ideas, even if I don’t buy them. When I buy a stock I will always state how many shares I bought at what price and how much of a brokerage fee I paid, so it is clear what is actually possible to accomplish with a small amount of money or if you are just starting out.
Everyone loves lists it seems for this time of year, so I have complied my own. They are not all the same type of items, just important things that came up this past year. They are certainly not all the best investment ideas I had.
I am still working on an evaluation of a Net Net company that I have not invested in. But I started thinking. Do any of you have investing ideas that you would like to share? It doesn’t have to be a Net Net stock, or even a value investing stock. I am simply interested in hearing what readers of this blog have been looking at. You don’t even have to post an idea of something that you have actually invested in, yet.
This week’s Beginning Investor Term is Return on Assets (ROA). ROA is another investing concept, like last weeks ROE, that helps determine if Management is running a company effeciently. Or in this case specifically the assets it has at it disposable. Assets include both shareholder equity and debt.
To readers of all faiths or lack there of. Peace and love. Not much of a capitalist notion, but it is Christmas and I haven’t done much to help the economy in the shopping department. Related Posts:No Related Posts
Think of this post as a Christmas present, even though this knowledge has been around for a long time. When you are slumming in the Low Book Value world you need to make sure you are protecting your down side. After all there is a reason most companies have been humbled by the market. The Altman Z-score can be a tool to help you avoid the worse of the companies in the value world.
Return on Equity (ROE) is one of those fundamental concepts of investing. The principle is simple. What is the return on the stock holders equity invested in a company. As with almost everything else, there is an equation involved. ROE=Net Income/Shareholder’s Equity. Net income in this case is after Preferred shareholder’s dividends have been paid but before common stockholders dividends. Shareholder equity is common shares only, not preferred shares.
It may seem contrary to some investors to invest in Low Price to Book Value Stocks. After all, isn’t there a reason the stock price in relationship to assets is beaten down? Yes, probably. Is it enough that Ben Graham made money using a version of a low Price to Book investment strategy? For some investors, yes. Luckily we have someempirical evidence supporting this investment strategy. There are several studies that lay out the case for investing in these type of stocks.
As part of a new series of Posts I am going to discuss why Value Investing is my preferred investment philosophy (although I have been known to stray now and then). I am going to sum up some of the most important studies that demonstrate why these theories are better than other strategies, in the long term. This does not mean that Uncle Homer didn’t make a killing buying Apple at $12 and selling it over $200. There will always be exceptions. But who wants to be an exception? I would rather have sound trading strategies on my side and not just luck. Although I will take good luck any time I can get it.
It takes almost as much research to discover why you don’t want to invest in a company as why you do. But going through the process is important and we make different decisions for different reasons. Nu Horizons came to my attention in the NCAV Newsletter at Gurufocus that I have posted about before. When they recommended the stock it was trading around $3.85 and they had NUHC’s NCAV value as $6.81. In their words, “a 71% upside.” Very interesting. I began to investigate further.keep looking »