Finding good stocks to study

FINDING GOOD

STOCKS TO STUDY

Charlie Cameron, Western Wisconsin Investment Club

REMEMBER: PORTFOLIO CONSIDERATIONS DRIVE THE SEARCH

Focus on finding prospects in the same industry/sector ~ apples to apples.

Which industry and business sector is underweight in your portfolio?

Which company size is underweight in your portfolio?

IDEAS FOR FINDING GOOD STOCKS IN THE SECTOR YOU ARE STUDYING

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MY APPROACH - COMBINATION Using BI Lists; note stocks mentioned the last 3 years in the sector I’m studying

Screen for additional stocks in this sector using: http://finviz.com/screener.ashx

Initial Screening ParametersBusiness Sector

5 YR Sales and EPS Growth Rate > 10%Net Profit Margin > 10%

ROE > 10%PEG < 2

Float Short < 10% (weeds out stocks that have significant short interest)

NARROWING/AGGREGATING THE LIST OF STOCKS

What industry clumps are showing up in this sector?

Companies do not always fit neatly in a sector and sectors are not always easily distinguished.

So lump similar companies together for study (EBAY vs. Amazon).

How is the sector as a whole doing?

Look up major competitors using Morningstar or BI website. Are their fundamentals as good as the companies you assembled?

HEALTH CARE SECTOR SCREENED – NOTICE INDUSTRY CLUMPS

Ticker Company Health Sector Industry Country Revenue MentionedBIIB Biogen Idec Inc. Biotechnology USA Large Finviz, First CutCELG Celgene Corporation Biotechnology USA Large Finviz, First Cut, Ticker TalkGILD Gilead Sciences, Inc. Biotechnology USA Large First CutSGNT Sagent Pharmaceuticals, Inc. Drug Manufacturers USA Small FinvizSHPG Shire plc Drug Manufacturers Ireland Large FinvizUTHR United Therapeutics Corporation Drug Manufacturers USA Medium Finviz, First CutICLR ICON Public Limited Company Labs, Diagnostics & Research Ireland Medium FinvizPRXL PAREXEL International Labs, Diagnostics & Research USA Medium Ticker TalkENSG The Ensign Group Medical Care/Specialized Services USA Medium Ticker TalkHGR Hanger Medical Care/Specialized Services USA Medium First CutIPCM IPC The Hospitalist Medical Care/Specialized Services USA Medium First Cut, Ticker TalkMD MEDNAX, Inc. Medical Care/Specialized Services USA Medium Finviz, Ticker TalkUHS United Health Services Medical Care/Specialized Services USA Large Ticker TalkUSPH US Physical Therapy Medical Care/Specialized Services USA Small Ticker TalkEW Edwards Lifesciences Corp. Medical Equipment & Supplies USA Medium Finviz, First Cut, Ticker TalkGMED Globus Medical, Inc. Medical Equipment & Supplies USA Small FinvizLMNX Luminex Corporation Medical Equipment & Supplies USA Small Finviz

I’LL LOOK CLOSER AT: MEDICAL CARE/SPECIALIZED SERVICES

Ticker Company Health Sector Industry Country Revenue Mentioned

ENSG The Ensign Group Medical Care/Specialized Services USA Medium Ticker Talk

HGR Hanger Medical Care/Specialized Services USA Medium First Cut

IPCM IPC The Hospitalist Medical Care/Specialized Services USA Medium First Cut, Ticker Talk

MD MEDNAX, Inc. Medical Care/Specialized Services USA Medium Finviz, Ticker Talk

UHS United Health Services Medical Care/Specialized Services USA Large Ticker Talk

USPH US Physical Therapy Medical Care/Specialized Services USA Small Ticker Talk

USING YAHOO - COMPARE TO ITS SECTOR (XHS)

Under-Performers

NOTE 1 – Sector was fairly tight until January 2014NOTE 2 – ENSG, USPH, and UHS Beat the Business Sector ETF (XHS – red)

TIME TO MOVE ON TO THE SSG

I plan to throw out the lowest performer in the Medical Care/Specialized Services industry ~ HGR.

I will do a visual analysis (SSG) on the rest: ENSG, IPCM, MD, UHS, USPH.

I selected a couple promising competitors to do an SSG on as well.