By now hopefully you are tracking a few green stocks you like. If not let us know and we will share a few of ours.
We are looking at three factors before buying anything.
One. what is the EBITDA? When you track any stock add this number to your list of important numbers to watch. Whatever tracking service you use always add EBITDA. We like Yahoo, but you can use any service you like. Doesn’t matter as you are only tracking potential stocks to buy.
Why EBITDA? Earnings Before Interest on the debt they have. Taxes they must pay. Depreciation of assets over time. Amortization of the intangible assets over time. If the company is so small that don’t have earnings before ITDA then the question becomes why invest. This goes to working cashflow and with any business that potential cashflow must be strong enough to cover basics.
Two. S,G, & A. Sales, general and administrative costs. If this number is out of wack, forget it. We work on 18%. for Sales. Any more than that and the margins start to get hammered. If the management is not willing to get lean and mean now, they never will. Why invest with management that can’t work tight in a down market.
Three. The percentage above or below the 52 week low. If we are not buying the 52 week low the question becomes why. That is what the stock is being tracked for in the first place, to pick the bottom each year.
IF you can’t pick bottoms, don’t buy stocks, until you learn how.
We are still working on picking bottoms.
