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From: | "david.gibson" <david.gibson@k.co.nz> |
Date: | Wed, 1 Oct 2003 12:03:41 +1200 |
>My question to everybody is: When you see a company that you are interested >in investing in, what is the most important analysis that you do? 1) Cashflow For me - cashflow is the key. It is possible for a company to be losing money and still have good cashflow. It is also possible for a company to be making money and have terrible cashflow. The cashflow analysis is the first place I look in an annual report. If a company is generating cash - it becomes a candidate. 2) NTA The next factor is asset backing. This is more than NTA - some industries, in long term structural decline, I would expect the price to reflect a significant discount to the NTA. On the other hand - other industries with long term growth prospects, I would expect to pay a premium. The assessment of NTA is mixed with a number of intangible factors. I will buy into declining industries if the NTA discount is good enough. I will only buy growth prospects if the NTA premium is acceptable. 3) Market Timing Interest rates are the single biggest factor, for me, influencing market timing. (I know this does not directly relate to your question). Some sectors are sensitive to interest rates (retail), some are not (utilities). Generally, if interest rates are trending down - with a lag in timing - I'm buying. If interest rates are trending up - with a lag in timing - I'm selling. ---------------------------------------------------------------------------- To remove yourself from this list, please use the form at http://www.sharechat.co.nz/chat/forum/
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