How to Analyze a Single Stock
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- Опубликовано: 11 июн 2024
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Maybe a particular stock has caught your eye... but how can you tell if it's a good buy?
sources:
finance.zacks.com/seven-ways-...
www.fool.com/investing/how-to...
www.nerdwallet.com/article/in...
www.wallstreetsurvivor.com/ho...
Two Cents is hosted by Philip Olson, CFP® and Julia Lorenz-Olson, AFC®
Directors: Katie Graham & Andrew Matthews
Written by: Philip Olson, CFP® and Julia Lorenz-Olson, AFC®
Executive Producer: Amanda Fox
Produced by: Katie Graham
Edited & Animated by: Sara Roma
Fact checker: Yvonne McGreevy
Images by: Shutterstock
Music by: APM
CORRECTIONS & UPDATES: As several sharp-eyed viewers noticed, the animation on P/E around the 5:08 mark is showing a different formula from what Julia's saying. Julia is correct that you should divide the EPS into the Stock Price (Stock Price/EPS), but the animation shows dividing the EPS *BY* the Stock Price (EPS/Price). The corrected animation should've shown the formula to be Stock Price / EPS - thanks for bringing this to our attention!
It's cool guys! For a moment I thought i was wrong, but googled it! Great content! 👌
Yep, the video currently shows Earnings/Price but all good guys. Great job making the correction!
Thanks for the correction 👍
Got it we are not good in Math but we want to produce RUclips content using two scents EPS and PE
That’s wild that Phillip had a mustache as a baby!
Had me in stitches 🤣
It's his trademark
Don't shame mustache baby.
Lol
Best intro
To get rich in life, you need to spend less and invest more. You don't expect to spend 90%, invest 10% and expect financial growth. there is a saying "what you eat dies but whatever you invest lives forever"
Nobody can become successful over night, they put in background work but we tend to see the glittering part. Fear is a dangerous components, hindering us from taking bold steps we need in other to reach our goals.
@@karencampbell4834 i tried the market but got discouraged by the constant fluctuation in price, lost some good earnings as a beginner so it's not always about fear.
@@laramia3045 Have you considered contacting an investment portfolio manager or a good financial adviser? You should. It is the best way to start when you are a beginner.
@@lunaavery2131 I totally agree, you need a good financial adviser to put you through all what you need to know and also to tell you when or where to invest your money. That's what i did and that's what i'll over and over again, minimal risk
@@lunaavery2131 I thought about it, but these days lots of scammers and unprofessionals
The main thing I tell people is to expand the date range on the graph. Most people only look at 1-3 months, change that to 5 years or max. You'll get a much better picture how it's actually doing right now.
Why would you only look at 3 months? That's insane
@@colin1818 exactly
@@colin1818 day trading. Basis of that statistical analysis.
That’s the first thing I look for.
Picking individual stocks is usually too much excitement for me, I'll just stick to my "boglehead" approach of investing in diversified inexpensive index funds and que sera sera!
Yes this should've been mentioned in the video and also the fact that the vast majority of people, including professionals, are terrible at consistently outperforming the whole market (thus nullifying the point of making the video?).
I think they have an ETF video
@@djayjp It doesn't nullify the point of the video at all, because in the end is a personal choice. I would invest in both ETFs and also pick individual stocks
Same lol
@@LuisSierra42 Logic and evidence would suggest otherwise.
I am an economics student at GWU and I absolutely love your videos! They explain concepts better than any of my teachers do!
Really? At a university?
@@karihotakainen5210 you'd be surprised
Baby Philip *mustache included*, was not a mental image I was prepared for on a Wednesday. 😩
Low cost index funds are a recommended long term strategy. Trying to pick stocks still brings human emotions into it, and people are noticably bad at trying to time the market. #justmytwocents
That's our personal approach as well, which we've mentioned in other videos. But so many people are interested in this side of the game that we wanted to aknowledge the tools that are out there to assist.
But how bad? See, you won’t know until you try it. Know thyself.
@@chowsquid How bad? The S&P 500 return from 2001 to 2020 is roughly 10% a year, the average investor racked in a whooping 2.9%. That is the number reported by Goldman Sachs in 2021.
I'll just stick to a total stock market index fund :).
Personally, I see nothing wrong with folks who want to learn about individual stock analysis, but after doing some of that myself, I came to conclude that the time spent and stomache churning from both FOMO and FUD wasn't worth it, esspecially when I can just contribute regularly to my 401K and IRAs through index funds and ETFs. I can then spend my time doing things I enjoy.
That’s cool, however some people obviously love to study stocks.
One thing that's important to keep in mind is share dilution.
When a company releases more shares, your share becomes less valuable, because you own a smaller part of the company.
Therefore, look whether they are diluting or buying back shares and add that to your consideration when considering buying.
do they become less valuable because you have fewer voting rights now that you own a smaller part of the company?
@@louiswachira7015 Say a company has 100 shares outstanding. You buy 10 of them, you own 10% of the company.
Now they issue 100 more shares, totalling 200 shares. You still own the 10 shares, but instead of owning 10% of the business, you own 5%.
@@augustus331 Isnt that untrue, because you get additional shares to compensate for the lose of values in order to come out equal
@@codelion3496 Nope. Diluting shares is basically the company deciding to reduce your stake in their company in return for cash. The alternative is that they could go into debt. What would be the point in issuing more shares if they compensate current shareholders?
Do note that share dilution doesn't always have to be bad. Tesla is stupendously overpriced, so they can raise tons of capital with issuing more shares. Once a share price is very cheap, they could buy back shares and increase your stake.
@@augustus331 Well they drop price per share goes down, thus making it more accessible to "low Budget " investors
For the record, EPS and the P/E ratio are only minor parts of fundamental analysis. Frankly, they're about as basic as it gets. In my mind, fundamental analysis is really about Discounted Cash Flow (DCF) analysis. This means estimating a company's future cash flows and discounting them with an appropriate discount rate to arrive at an intrinsic look at its Enterprise Value (EV). From a company's EV, you can back into its equity value and calculate a price per share. If the market's price is below this intrinsic share price, you should buy the stock. If the market's price is above this intrinsic share price, you should sell it. That is what fundamental analysis truly is.
Very true. They’re just keeping it simple. They barely scratched the surface for technicals either.
I use both in my portfolio management personally. Definitely hope more people start getting away from idea they’re opposed
Anf where do you get the companies Cashflow from?
Been asking this question for so long. Thank you for doing videos answering the questions no one talks about 🙏🏼
"Don't look for the needle in the haystack. Just buy the haystack!"
-John C. Bogle
Hey what's this giant pole doing in my haystack?
BUILD YOUR FUTURE , SMALL STEPS, EVERYDAY SUCCESS IS A PROCESS , YOU WILL BE SUCCESSFUL!!!!
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think that am blessed because if not I wouldn't meet someone who is as spectacular as Expert Mrs patricia Turner.
Wow!!! I’m just shocked you mentioned and recommended mrs patricia turner trading services
Well... I will advice you should stop trading on your own if you keep losing and start trading with Mrs patricia turner trading services
Thank you for this video, I actually learned something new that I have been curious about for a while.
At 5:01 the formula given for P/E is backwards. It should have price in the numerator and earnings in the denominator.
You two are the best! Thank you!
Gonna be real with yall and criticize this video for not really putting a warning out that single stock analysis and investing is mostly a futile and dangerous endeavor for the average retail investor. Not as bad as straight up gamlbing, put close enough. Long term buy hold of diverse single stock portfolios does work, but at that point you are just building an index fund with alot more trouble. There is an appeal, I get it, for the 'little man' to beat the market with math, however:
1) you are not the only one doing the math, and unless you have the infrastructure, someone is doing that math faster than you. You and your computer are not going to beat an investment bank with supercomputers and direct high speed connections specifically built for the task. Its NOT enough to discover an edge, you must exploit it before someone else does otherwise that edge is lost.
2) assuming the market is rational and will behave mathematically predictably is a very poor assumption. Math alone doesn't win poker games.
THE most dangerous thing for an investor is for them to develop an ego or a sense that they "know how to time the market" or "know how to pick stock" (far better to screw up in the beginning and learn that lesson, rather than succeed a bit then fail when there are more zeros in your account).
Remember, if you REALLY could do this for a living, even marginally better than the professionals or the market return, you should quit your job, do it full time, and end up rich enough to spend your days on yacht snorting blow off a hooker. Matter of fact, anyone who says they have the secret to stock market timing/stock picking... ask yourself "where is their yacht full of blow and hookers and why are they telling ME their secrets".
The sad reality is most people are terrible stock pickers / traders / market timers. We talk about the mythical "7% average return inflation adjusted". That's a fantasy for undisciplined investors who succumb to thinking they know better and start trying to time/trade/pick the market. Very VERY foolish and financially devastating idea.
One last antidote for the futility of trying to beat the market. Remember the guy who knew Madoff was crooked? He simply looked at his returns and discovered them to be fantastically good (about 1% a month) and concluded it was either a ponzi scheme or insider trading. www.chartr.co/newsletters/2021/4/16/mr-madoffs-marvellous-returns
"ask yourself "where is their yacht full of blow and hookers and why are they telling ME their secrets"." That made me chuckle. Very true.
I have a diversified portfolio of stocks. I pay no management fees, there is no turnover unless I chose it and I can avoid companies I have ethical issues with.
I don’t try to time the market or beat the pros.
I have been picking individual stocks for about 10 years and have an Average of 20% returns. Its not that hard if you lesrn fundamentals
@@kalebhgoodwin see, that’s where op was right. If you can get 20 percent returns over 15 years you should be managing a billion dollar fund. Seriously. You should charge 10,000 people $1000 each to get tips from your newsletter and bring in 10 million dollars in subscription fees alone.
You should borrow as much money as possible (second mortgage?) At say 5 percent and put it all in the market. If it is easy to make 20 you are risking little to borrow 1 million at 5 percent. Then after 10 more years, you could turn that into 10 million with leverage. With that ability, you should have been earning 200k for 15 years and putting 100k in the market so you have 10 million. Borrow against that and grow 20 million to 150 million in10 years. Then leverage that to a few billion.
You will pass Bezos in 35 years at 20 percent interest adding your newsletter earnings and hedge fund bonuses. You are in track to destroy Buffett and become the wealthiest stock picker in history. Good luck.
I'm not sure why this comment has so many likes. While it is true that picking single stocks is riskier than investing in an ETF there are a couple inaccuracies in the comment.
First being that if you're picking single stocks that somehow the speed of your computer or the ability to notice a trend first has anything to do with "beating the market". Timing the market and beating the market are not the same thing. In 2010 I could've placed all my money on Apple stock any day of the year and I would've beat the market. While timing can be incredibly valuable picking a good stock and sticking with it is much more valuable.
The second inaccuracy is "assuming the market is rational". It isn't. It never has been nor will it ever be rational. Is the current price of GME stock rational? Or how about AMC? Is that based on fundamentals?
Third the comment assumes that beating the market equates to being a billionaire. You can beat the market with 100 bucks and still only have a few hundred.
I agree with the overall sentiment but the details are... less desirable. Stick to ETF's with your retirement. Feel free to gamble on single stocks with money you can lose.
This was one of your most interesting & informative videos to date! Thank you!
I think you’re forgetting to include some important info/warning especially for a video targeted at beginners.
Stocks have negative skewness, very basically meaning that most individual stocks have flat or negative returns, BUT stock returns are positive over time because a very small number of stocks have very large returns and those stock carry the majority of returns.
There’s a great paper called, “Do Stocks Outperform Treasury Bills” that includes specific figures.
5:06 They turned it into an EP ratio instead of PE ratio.
"Start small and do your own work to verify" best advice for new investors
This was a helpful guide thank for the knowledge.
Nice work giving an overview of different approaches.
Thank you quite easy to understand
Long time viewer. Would be great to do a part 2 on this a dig a little deeper.
Thank you so much guys !!! Your the best :)
Amazing content, thanks!
While the Buffet quote did have 3 "prongs", there was nothing technical about it. 2/3 Fundamental, 1/3 Qualitative
Yup. Another misteak 😜on the show. The other one was P/E….as in Price / Earnings…it’s right there in the name. Sigh.
I like the way limitless put it. (Sure you can make a little by the number, but ultimately it is about mass psychology)
A business could do very poorly, but still make big moves in the stock market as well as a good company could do poorly in the stock market. Look to where the people are thinking, and that is where the money is. Keep hustling out there! 🙆♂️
Loved the video. Well done. Will be rewatching to take notes. I’m a individual stock type guy so the more stuff I can learn about risk management the better.
Stock picking is a poor risk management strategy.
@@karihotakainen5210 when used as the sole judgement, yes. But, as they pointed out, when added to other factors of determining the risk it’s very helpful. But it’s just a piece of the whole picture.
I love this channel!!!!!!!
Love you guys
Qualitative and Essentials are good ways for me to aproach stock investing.
Really good episode
Thank you Mr and mrs mustache guy, much appreciated 🙏
Interesting video! Thanks
You two are great! Frickin' luv ya'.
I love this channel
1:11 and I took that personally.
I been following you guy since the early beginning, now i save more money and have some to invest. This video also help me choose my first stock, thank you
Love this couple.May God bless them
Is there a way to do ecologic investing, can you make a video on that subject please?
Do you think you guys could do a video about health savings accounts? I think it could be a good video topic !
Thanks for watching, I have something real big I would love to introduce to you.
Text 📩
+.①.⑨.⑧.④.④.⓪.⑨.①.④.⑧.⑤
Contact me directly!
Good video
Great to see you've been rocking the mustache since you were an infant!
I'm gonna need a link for that shirt. thank you.
i love you guys... greetings from Ph
Thumbs Up Way Up just for that RYU stage music !!!!
Did the return of that stock include inflation?
Really great explanation! The way I do it is a bit more complicated but it’s the same steps just more in depth.
Around 3:09. I'm a bit confused. I don't think candlesticks are a type of pattern, they are a type of price chart (Line charts, bar charts, ... etc)?
Question: if you work for Company FGH, and you go on your stock trading app on your phone to buy/sell Company FGH's stock, does that qualify as insider trading?
No. Insider trading is when you know something that the public doesn't know and you trade on that knowledge.
Nice shirt and stache sir!
Go for it 🙂
I still wonder how you manage to say "and that's our two cents" at the same time. Sounds so hard
Do we save more when we buy a house or build a house?
So, I am trying this peer to peer lending site? What are your thoughts on that compared to stocks to grow your money? While I know its not for everyone because with a stock you can sell out to recoop funds, but for me who wishes to just grow my money as fast as possible even if I can't touch said money for quite some time, is ideal? My stocks make me 12% average over 4 years, that is about 50% growth in 4 years. Not bad. This, accounting for the average loss (and mind you they will try to recoop *some* of the losses for you) would net me approximately 15%. Would that be a safer or less safe than stock markets?
Does the same fundamental analysis apply to selecting ETFs and Mutual funds?
ETFs, Yes as long as constituent list is relatively stable. The aggregate of the financial/fundamental data and market prices should suffice. Mutual Funds, No.
Where can I purchase a stock certificate?
This video is going to blow up!
Very surprised there was no mention of the Edgar tool D:
6:05 this. it is much better to know and love the company's industry where they operate. For me, I have decent knowledge of semiconductor companies and their products. Loving a product also has small luck with it like those who bought Tesla shares because they like the car they bought or Apple shares because they love their iPhones. Only downside it is an emotional decision, making them it hard to sell when it is going down, missing the opportunity buy when it is low.
Thanks for watching, I have something real big I would love to introduce to you.
Text 📩
+.①.⑨.⑧.④.④.⓪.⑨.①.④.⑧.⑤
Contact me directly!
"Stocks only represent the companys economic value, if you want the companys REAL VALUE, you look at its history!"
~ Warren Buffett.
Could you guys do a video about shopping online?
Good day to you More please! I’m learning with Ucademy, Pluto trading blg, Algotrader secrets blog, etc.
Great Content! Keep it up!=)
Love the video (all their videos!), but Philip at 5:45 suggesting DD has higher profitability than CQ because of its higher EPS is simplifying it too much because of the number of shares that each have issued. (And maybe the lower P/E was because the previous year, CQ's EPS was $2 and DD's was $6? To be fair, he did say that DD just "might" be a cheaper buy!)
Why aren’t you guys 1M already!
Any trading app you'd suggest that doesn't use huge leverages? 🙏🏼🙂
5:08 P/E = price/EPS, but it was flipped in the video
Great catch on the graphic -- correction posted in the comments!
Good advice to do your own research, and whatever you do, don't invest based on a Motley Fool recommendation. Another thing that Warren Buffetz said is "Buy the rumor, sell the news" meaning by the time you read news about a stock, people are already selling it
Thanks I bought motley fool and lost money with recommend stocks. The stocks I bought based on what future predication I made tons of money and just beginner.
He might have mentioned it in passing, your quote here, as it's a common axiom on wall street. But I wouldn't call it a Buffet quote, it's not his style.
I doubt buffer said that. Not his style
shouldn't the formula for P/E = current price/earning per share?
Great catch on the graphic -- correction posted in the comments!
mutual and index funds are the way to go - you can do a few single stocks to try your luck, just put enough to where if it the stock doesn't work out it won't cripple you - i only put around 5% of my net worth in single stocks
Stockpicking? Is that a problem I'm too index funds to understand?
Is it a good idea to take out your pension now before retirement? Just curious.
Indexed mutual funds are the way to go.
4:41 A missing letter n makes "earnings" become "earings". Now that is a huge profit!
I like the stock.
0:40 that was nice of your grandmother.
Awesome
There is a difference between trader and investors, trader wants technical analysis and investors are fundamentalists.
Hey! It's the CAPM !
These two are the high school governomics teachers we wish we had
I would so invest in Too Scents!
I love how he was born already with his moustache
The price of dinsey in 1984 or around there is $1,40 after all the stock splits. So that 50 shares you got in the account means that when the single share was bought. It costed $70. Therefore the return is 50 times as low. Basically it's already adjusted for so you can't just multiply it by 50. That's stupid to do
1:37, Light Theme User Detected.
I just started watching your videos I’ve gained so much economic confidence thanks to you! I’ve been saving, investing and planning over the last year. However, how do we plan for something like a recession or economic crisis?? Even if I invest smart now and do everything right, what if the stock market crashes? or even something like hyperinflation? I know it sounds paranoid but what steps could I take today to remain financially sturdy during those times? I think this might make a great video topic and I would love your feedback! Thanks so much again!
Please listen to Peter Lynch. The idea is not to invest money you think you'll need 2 years down the road. There are many strategies you can apply, for example I invested half of my savings into Tesla, while the other half I'm keeping around for an eventual trip around Europe and South America, which I might take in the next year 😊 that was my strategy that I was comfortable with ruclips.net/video/72Pq5zKEi_g/видео.html
I think the graphic at minute 5:06 might have an error. Shouldn’t the P/E Ratio = Price per Share /Earnings per she share?
Great catch on the graphic -- correction posted in the comments!
@@TwoCentsPBS thanks for the reply! I'm a huge fan of the show!
Watching this video has me asking an important question, aside from the mustache Philip was stylin' as a baby:
The tips used to evaluate a stock - will they work on ETFs and mutual funds? Or, do those investment vehicles function so differently, requiring a different way to analyze them before investing?
Mutual funds and ETFs have no fundamentals because the makeup of the funds changes when the fund managers buy and sell shares in the underlying stocks and bond funds.
@@TheRealE.B. You can argue that the fundamental is the sum of the underlying assets. But why overcomplicate things when it guarantees you your fair share (close to market returns) at minimum work and cost?
@@nguyenhongquang6397 and @leadfoot9x Ahhh..., okay. I think I have a better picture of things now. Thank you. Definitely have much to research and learn before investing.😊
I miss 2 cents!!! Pleaaaase make an episode on Clothes shopping!!!
Too Scents might be better than the Febreeze Shitrus I use for the bathroom. Thanks Too Scents!
"The value of a company = the net present value of all future cashflow"
This is the essence of modern value investing and this is how Warren Buffett values a company.
I would like to see Two cents (Or Two Scents!) air freshener.
Fundamental = what stock to buy, Technical = when to buy it.
"Too Scents"
took me a while tbh
Wait! There is another type. An Emotionalist. And, that is me.
I was scrolling and i misread the title as “how to analyze a single sock”. I instantly clicked.