Stock Screener 2: The First two Screens
This is the 2nd in a series of hubs that will help you pick real growth shares.
As I said in the first Hub in this series, I'm putting a number of shares through a number of sieves/screens/tests; using a spreadsheet, with each column having a screen as a heading. Information about each share will be entered under the headings then given a score. There are 25 screens, thus the one's with the highest scores would be the shares to think about investing in.
Just four share to show you how it works
I'm only entering four shares to give you an idea how the procedure works. Ideally 10 to 15 shares would be best.
If you want to add a share to the list by all means enter it in the comment box and I'll include it.
The first share I'm going to enter into the spreadsheet is
1st IQE (IQE):
2nd eServGlobal (ESG)
3rd Modern Water (MWG)
4th Mytrah Energy (MYT)
Click the link to the spreadsheet and you'll find the shares have been added. Hovering over the headings will also explain what they represent.
The first heading in the first column is the 'Company Code' sometimes called the ticker or to give it it's official title EPIC (Exchange Price Information Code). It's there just for your convenience when researching the companies just copy the ticker or the company name into your search engine.
The column next to that holds the company name, hovering over it will give you a link to the company's information page, on their web site; which explains exactly the type of business the company's involved in. It's there just as a reminder for you as you get further into the screens.
Both of these are not screens there just there for information purposes so do not carry a score.
Choosing shares to put through the stock screener
To help you find your shares, you might want to start off by looking for businesses you may know something about. What's your job, what's your hobby, what's the hottest thing on the market, even more important what's going to be the next big thing.
When you've decided on what type of market you want to look into; pop over to the Fledgling Index on the Morningstar website; one of a wealth of stock market information sites on the web, where you can gather information on the shares you pick.
Remember where looking for growth company's. Where hoping to pick a share that at lease may double in price.
Rename the next page on your spreadsheet 'Information Links' and save the Morningstar link.
The information on the site is vast but for now all were interested are Indexes.
In the centre of the page under the heading FTSE Index Shares you will see a drop down box with FTSE Fledgling selected.
Below is the list in alphabetical order.
Any company will do at this point while we go through the process of finding the information we need,
Click on Anglesey Mining. It takes you to a dedicated page that as quite a lot of free information. Copy the name Anglesey Mining search on Google which will give you the the company web site. As you can see the second tab on the Anglesey Mining site after "home" tells you about the company.
The Fledgling Index is a good place to start, however returning to the Morningstar website and click on the drop down box will reveal all the other Indexes.
The More Important Independent Story
Most of the information you sauce will be through, free, online trading companies, and the website of the company, who's shares you've bought, which we've already mentioned.
There is one other very important sauce that's a must. It has to be said that companies can be a little slow to come out with any negative information. That's why independent advise must be taken into consideration; the main two investment magazines in the UK are the 'Investors Chronicle' & 'Share Magazine'. You can obtain both from your local newsagent who would be glad to order them for you if you ask and you don't really have to buy both one will do.
Both magazines have online versions which you pay a yearly subscription for.
Rather than sign up for subscription start off by just getting the magazine there about £3.25 but well worth the money.
However the on line version can go back 5 years or so to look at how the business as progressed in that time and more importantly how the company intends to progress over the next 12 months.
Look for something a little different.
It could be :
A new CEO with a great reputation.
A Niche product with a strong patent.
A great monopoly.
Winning a gigantic contract.
Here's a snippet from an article on an up and coming company that had just posted it's interim results (half year):
"Central and Latin America chipped in ! 5.4m from virtually nothing a year ago and sales to Asia and the Middle East quadrupled to over ! 6m. Meanwhile, a 137 per cent surge in higher-margin mobile sales means they now comprise three-quarters of the business."
Again if you go to the companies website it will have a list of all their announcements, defiantly for the last couple of years with most covering 4 to 5 years; end of year results, interim results, director's share transactions, contract wins ect. This will help plot their trading history.
Interactive Investor is another free information site where, as most do, you can enter a fictitious portfolio and watch how you progress without having to buy. It also as attached to each share a 'Discuss' tab where people who have also bought the same share put forward there views and ideas as to how the share is going to perform. Just register it's free.
Don't forget to save the link on your info page.
We'll cover the six key numbers you need to know as we progress
Apply the Zulu Principle to your share research
I could go on for hub after hub about the different ways you can invest your money but I'm not going to.
Why! Because I don't know about all the different ways of invest your money.
But I do know this works for me.
Jim Slater, one of the U.K.s investing gurus, wrote a book on investing after observing his wife reading a four page article in the Reader's Digest on the Zulu. After reading the article it occurred to him that his wife now knew more about Zulus than he did. He also thought that if she went on to read every book on the Zulu in the local library, she would then be some what of an authority on the subject.
The key point is she would have become an expert by applying maximum effort in finding out all there is to know in this relatively niche subject.
Jim Slater's book which he researched at great length was called 'The Zulu Principle', which I highly recommend and have adopted the principle, not just in investing but throughout my life since reading the book.
If you don't know anything about a subject, apply the Zulu principle find out all you possibly can about it and you will become an expert.
After reading the book I decided to follow Jims Zulu principle by find out all I could about investment tools, the shares I concentrated on where growth shares because of their potential to double and treble in size; targeting share screens that eliminate the chaff and throw up the best of the bunch.
Using this process has worked for me but I must declare at this point that I am not a professional investor. I do not work for any kind of investment house and the information you find in these hubs are not share tips and does not constitute any form of advice or recommendation.
I'm merely showing you a procedure, a tool if you wish, that will help you in the process eliminating bad shares and pushing good growth shares to the front of your research.
Shares can go up and down and carry the risk of loss.