Internet Software Stocks
Internet Software Stocks
Stocks: Reduce Risk Yet Maximize Profits
It is important to note that every smart investor wants to minimize risk while maximizing profit potential. Yet conventional investment theory tells us that in order to increase returns, you have to increase risk.
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You may be surprised to find that this conventional wisdom is not always true.
When I was a professional stock trader, I made most of my profits from appreciation in my portfolio, not in short term trading. In other words, I was a position trader. Any losses in my stock positions were taken out of my paycheck at the end of the month – in fact, I had to pay back any loss. If you are in this position, you desperately want to learn all the techniques to make large profits without risking much. I became an expert out of necessity. So while my trading account had virtually no losing months, my gains were as much as 300% per year.
In my stock picking, I first looked for stocks that were so cheap they could not go down. If they did go down, I was happy to buy more because at those prices, you could buy the whole company and sell off the assets for a profit.
From this group of “safe” stocks, you select the ones most likely to have large appreciation.
A stock is cheap in my book if it sells below the liquidation value of its assets, and most cheap if it sells anywhere near the net amount of cash it has on hand. So the first two measures of value I looked for were book value per share and cash per share.
Book value is the value of the shareholders equity carried on the books of the company. Generally, since you are buying a share of stock, you will want to know the book value per share.
The one caveat to looking at book value is that companies often have intangible assets on the books, goodwill and the like. You have to take these intangible assets with a grain of salt. The safest thing is to look for “tangible book value.”
Book value per share is often calculated for you in the various Internet financial stock search programs available.
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The next indicator to look for is cash per share or working capital per share. Working capital is current assets minus current liabilities. These assets are near to cash or will generally be turned over in one year: receivables, inventory and the like.
To measure the health of working capital, divide current assets by current liabilities to get the “current ratio.” A current ratio of two to one or better usually indicates a solid company. As long as the company does not have any long term debt, or at least none coming due in the near future, the company is solvent and should be around for a while – little or no bankruptcy risk.
Next, we look for low price-earnings (P/E) ratios. In my opinion, buying high P/E stocks to chase growth companies is inviting real risk. If the company disappoints in earnings, not only will the stock drop from lower earnings, the P/E ratio will deflate as well, giving you a double hit.
OK, so you have found a company that is selling at or below book value with a current ratio better than 2:1, and a low, low P/E. It may be that the stock will not go down, but will that stock go up?
Picking growing industries and growth companies is more than I can tell you here, but there are two simple things you can look for first: (1) Is the company buying its own stock, or has it bought its own stock at about this price, and (2) are the insiders making hefty purchases of their stock?
Next, you can look at the ratio of revenues or sales to market values or the dollar amount of sales per share. Generally speaking, the company with a relatively high amount of sales per market value or sales will have more action on the upside. That company has more revenues to make profits from.
After you have narrowed the field using the above techniques, there will be no substitute for intense homework about company prospects to find which of those cheap stocks that truly give you superior returns, what I call my “Home Run Stocks.”
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(Stock Trading Software)–Stock Assault 2 0 DEMO–Stock Tading Software
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3M 8210Plus Particulate Respirator N95, 20-Pack $10.99 … |
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PlayStation 3 250GB System $300.00 The fourth generation of hardware released for the PlayStation 3 entertainment platform, the PlayStation 3 250GB system is the next stage in the evolution of Sony’s console gaming powerhouse. Loaded with a mix of multimedia features and functions available on earlier PlayStation 3 models, as well as a series of new advancements and refinements, the PlayStation 3 250GB system is destined to pus… |
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ASUS RT-N66U Dual-Band Wireless-N900 Gigabit Router $170.00 The Asus RT-N66U Dual-Band Wireless-N900 Gigabit Router is integrated with the Dual Band technology to provide any Internet-enabled devices with up to 450Mbps data transfers within 2.4-2.4835GHz wireless transmissions. Your online operations will be secured by the router’s WPS, WPA, WPA2, and WEP security protocols for your convenience. The router’s three detachable antennas ensure a stronger disp… |
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HP Officejet Pro 8600 e-All-in-On Wireless Color Printer with Scanner, Copier & Fax $199.99 This machine can produce about 4800 x 1200 dpi for colored prints and 1200 x 600 dpi for black and white prints. It can print up to 25,000 pages per month, surpassing the printing capabilities of the standard printer. This machine is also great for time-sensitive printing production as it has a printing speed of 32 ppm. To top it off, it is equipped with a processor that has a memory rate of 360MH… |
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Le Pan II 9.7-Inch Tablet (Black) $279.99 The Le Pan II Tablet runs on an Android™ 3.2 Honeycomb (upgradable to Android™ 4.0 Ice Cream Sandwich) OS, giving you access to over 500,000 apps via the Android ™ Market. The 9.7-inch multi-touch screen produces high-definition visuals while giving you total control over your mobile device. The Le Pan II Tablet is powered by a Qualcomm 1.2GHz dual-core Snapdragon processor, givi… |
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Barbie Video Girl Doll $17.99 Lights, BARBIE®, action! Barbie® doll is not just a doll, she’s a video camera, too! A real video camera inside Barbie® doll features a camera lens hidden in her necklace and a video screen on her back that allows girls to record and view movies instantly. It’s moviemaking from a Barbie® doll’s point of view—literally! Includes USB plug-in cord Doll is Windows/ MAC compatible Do… |
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