Overview
Hi, I am Ken Leoni, Marketing Manager for Stock Rover. Welcome to today’s Webinar: “Finding Great Stocks with Stock Rover”.
One of the biggest challenges investors face is how to identify what stocks are good candidates for investment. And then once stocks are identified, how does an investor go about ensuring they have done the proper research, generating a solid foundation of pertinent information so that they can make an informed investment decision?
First a little housekeeping, this webinar assumes you have a fundamental understanding of Stock Rover’s navigation and core capabilities. If you don’t, I would encourage you to watch the introductory videos in the video section under the help menu. I would also recommend checking out our blog and our Help pages, as they both contain an incredible amount of useful information.
Use a Screener
OK, let’s jump in. Let’s assume you haven’t identified a specific stock or set of stock to research. How do go about targeting tickers? The answer is screeners, screeners allow you to target and filter stocks that meet specific investment criteria. Stock Rover’s filtering criteria is comprehensive and contains well over 600 screenable metrics, which cover price performance, financial and operational metrics, as well as sector and industry metrics.
While you can certainly create our own screeners, you’ll want to start by selecting from any of the many screeners included in your Stock Rover account by default. There are also over 100 screeners available in the Stock Rover Library. Let’s start by picking a particularly popular screener called Strong Buys. Also let’s take a closer look at this screener’s criteria. This is what is known as a ranked screener which is unique only to Stock Rover.
This screener is returning stocks with a Margin of Safety greater than 25% and a Sentiment Score greater than 75. We can see that Stock Rover is weighting these two metrics equally. Weighting again, is unique to Stock Rover and allows investors to assign a level of importance, “a weight” to a given set of metrics, making them more impactful when ranking the stocks. You’ll note the MACD indicators aren’t weighted here, they’re selecting the initial population of stocks that will then be weighted. Stock Rover will return the top 50 Stocks with rankings based on the 50/50 weighting of Margin of Safety and Sentiment. Below we see our passing stocks. We can also narrow our population of stocks even more to just the top 25.
Let’s sort on rank. If we hover over the rank, we can see that for National Resources, its Margin of Safety is in the 98 percentiles so 98% of 50 gives it a score of 49 out of 50, for Sentiment 95% of 50 scores at 47.5, we add 49+47.5 and this stock scores #1 at 96.5 out of 100.
As you can see Stock Rover’s screeners do all the heavy lifting for you, keep in mind you can use Stock Rover’s screeners as is or leverage them as starting points and create a new or different screener.
Save Stocks in a Watchlist
Let’s assume we are going to use this list of stocks as our initial population to research, let’s add these stocks to a Watchlist. The Watchlist is great because now we have a static list of stocks that we can manipulate how we like. We can for example add or remove stocks from the list.
The Watchlist consists of the 25 stocks, I’m going to include PACCAR in our research, this Ticker met the screening criteria when I was initially preparing for the Webinar, but no longer because the market has been so volatile. You can see that Quotes allows investors to target tickers to include into any research, a very powerful feature. Notice PACCAR is bolded to identify it as a targeted ticker.
Let’s make more effective us of the real estate.
Research Stocks
OK let’s move on now and do a bit of research. We’ve narrowed down our population of stocks and we are now looking at the Layout which contains 3 panels. We’ll be using the spreadsheet like table Layout to research, categorize, and annotate stocks based on key metrics. We’ll use charts below for historical context, and we’ll also leverage the powerful Insight Layout on the far right to delve into stock scoring, financials, analyst ratings and news. These 3 panels combine to form the lynchpin for “Finding Great Stocks with Stock Rover”.
Research with the Table
So, let’s start in the Table Layout. The Table categorizes what metrics to compare and contrast based on views. I like to start with the Fair Value view, this view is quite informative because it is showing us our 26 stocks and their Margin of Safety which is the percentage difference between a company’s Fair Value which is computed by Stock Rover based on a forecasted discounted cash flow analysis and a stock’s current price. You can always ask Stock Rover to explain the metric as well. For a more detailed explanation as to what goes into computing Fair Value and Margin of Safety, I’d encourage you to header over to the StockRover.com blog post that describes how it works.
Let’s sort based on Margin of Safety. Let’s take a closer look at Enbridge, it has a Margin of Safety of 47% which tells me the stock is certainly not overpriced. I’ll use the tool tip to get high level overview of what’s going on. I can see the company has over $37 billion in sales, it sells at about 18 times earnings and it pays a dividend.
I’d like to learn a bit more so, let me switch view to Valuation. Again, we see a P/E of 18, but we also see that the P/E adjusted is at 66 times earnings, so company debt might be something we’ll want to take a closer look at. So, let’s do this, I’ll color the stock yellow and let’s add a comment. Lastly, we’ll add a Tag “Look at Later”. Notice I can group by any number of criteria including Tag.
The Stock Rover Table Layout’s power isn’t just that it displays a wealth of information in a tabular format, but that it also lets you manipulate the data. Earlier I expressed some concerns over debt, so I want to quickly narrow down the field to research stocks with a P/E Adjusted less than 20. The ability to quickly manipulate what you’re looking at natively in Stock Rover without have to export and further process the information is a huge time saver and unique to Stock Rover. You can quickly sort, filter, and save your criteria and then later come back and resume where you left off.
Research Stock History with the Chart
OK, Let’s say I am a value investor who goes by P/E as one of my primary metrics let’s sort the table by PE. Braemar Hotels I’m not really interested I’m not into energy either, but I haven’t heard of this PACCAR company and I don’t know what they do. Let’s see what the Insight Layout has to tell us. The Summary tab gives a nice description of the company; they make Kenworth and Peterbilt trucks. We can see that the Margin of Safety and Value scores are really good, but the Sentiment Score is low, the Sentiment Score is calculated based on how much the market likes stock.
Let’s chart the price, I like to go back 2 years. Here we see they’ve had some bad times, but seem to be in general doing better, with a recent dip. Let’s plot against the S&P Benchmark and Industry, We can see quite easily that PACCAR is currently outperforming its industry, but not the S&P 500. Let’s also include EPS Events, we can see all positive earnings surprises up until July 2019 with a 2% miss.
Research with the Insight Panel
In the Insight Layout we can quickly see that a few years ago that their growth was subpar, it looks like they suffered because of that, but things are getting better. There is lots of good information in the Insight summary that is presented clearly and concisely. If we look at Estimates, we can see the sales growth estimates are -12.7%, this is something I’ll want to investigate in my research. I’ll add a comment to PACCAR “Valuation looks promising investigate why Sales Growth is poor for next year”.
As I indicated before I’m a value investor, so let’s look at Valuation, the 5-year P/E Range is from 9 to 46, so the stock is trading near the bottom of its 5-year range. Let’s chart the P/E over the last 5-years. We can see after their bad quarter they must have taken some charges, but once that aged out the P/E has been dropping steadily, so perhaps it is ripe for a recovery. We can see in its worst period, the stock lost 33%, that was in January 2016.
If we go to the Growth section of Insights, we can look at the PACCAR’s sales growth verses industry, it is consistently growing a little bit less than the industry, so it seems to be a more mature company, but that’s not such a bad thing I am a value investor looking for mature companies that are going to pay good dividends.
If we also take a look at profitability, we can see that although the growth isn’t as good as the industry that PACCAR has better Net Margin, Return on Assets, and Return on Equity. So, it is probably in a stronger financial situation over its peers.
Let’s say we’d like to delve even deeper into what’s going on we can go to Research Links, we would want to look at the earnings call transcript and investigate why they had the earning miss. The EPS tab delivers quite as bit of information, I’ll again want to do some more homework as I look at the soft estimates for Q3 and Q4 for both sales and earnings. Although 2019 EPS is projected to eclipse 2018.
I like stocks that pay dividends I can see that PACCAR is on track for an 18% increase over last year, notice the big drop in dividends in 2016, that’s an unusual drop, not many companies cut their dividend that bad. Perhaps there is something about this industry that makes it cyclical.
Given the earnings miss, I fully expect the analysts to recommend a Hold. I see the average target price is $71.90.
I also want to see what others are saying, so let’s go to the News.
OK I’m interested in this stock, but I want it a little cheaper, say $60. Let’s change the view to be “Buy Target Price”. Notice, I can add thresholds for buy and sell for any of the stocks I’m researching or own. This happens to be Watchlist, but the Stock Rover Table Layout could just as well be populated with the stocks that you’ve linked to Stock Rover through the Brokerage Connection.
Alerting on a Target Price
I’m a busy person, so I want Stock Rover to alert met when PACCAR hits the buy price of $60. So let’s create and alert. I want an email when the price falls below the target buy price of $60.
We can see that pretty much anything we could ever want or need to know about a stock or set of stocks is at our fingertips, that Stock Rover although extremely powerful is actually quite easy to use. Navigation is quick, clean, and simple.
Conclusion
Let’s summarize how you go about Finding Great Stocks with Stock Rover.
- The first thing you’ll want to do is identify a screener from Stock Rover or the Stock Rover library that mirrors your investment goals. Remember, you can use the Stock Rover’s screeners as is or update an existing screener to better match your goals or create your own from scratch. After you run the screener and generate a list of candidates, you’ll want to refine what stocks you’d like to research in more depth using the table Layout. It is from the table Layout that you can research, categorize, and annotate stocks based on key metrics.
- Once you’ve identified stocks to research further, you’ll leverage Stock Rover’s charts to gain valuable insights and historical context. In the interest of time, we didn’t cover the myriad of options and capabilities built into Stock Rover charting, for that you’ll want to go to the help section of StockRover.com and select videos. There are a number of charting videos there that can help you learn more about graphing events, technicals, and fundamentals.
- The Insight Panel delivers a wealth of information in a clear and concise format, it is here that you can quickly take advantage of Stock Rover’s scoring, Earning and Sales Estimates, Dividends, Financial Statements, Analyst Information and news.
I hope you found this webinar useful. Thank you for watching.
