What do you look for when evaluating stocks?

[Free Moral Agent]

I'm just getting into PM mining stocks and ETFs and would like to know which metrics are most important when evaluating stocks?

[oyarde]

Company history , stabilization , product in demand in future . Yearly sales , caash on hand .Yearly dividend devided by purchase price of stock. If it costs 125 per share , I want more than 19 per year dividend .

[Inflation]

Look at how many share are outstanding. <100 million is best. 100-200 is OK. 200+ is getting too diluted.

Look at where the assets are. I don't trust anything outside of NATO & NAFTA, and limit South American firms to 25% of my portfolio.

Look for low debt and cash on hand (unless you want to bottom feed on the dogs).

Here's good place to start learning about evaluation and comparison:

http://www.kitco.com/ind/matlack/nov022010_juniors.html

http://www.kitco.com/ind/matlack/nov022010.html

[Free Moral Agent]

Its a bit overwhelming to read into all the metrics that accompany a stock. Thanks for the tips.

[cubical]

Look at how many share are outstanding. <100 million is best. 100-200 is OK. 200+ is getting too diluted.

Look at where the assets are. I don't trust anything outside of NATO & NAFTA, and limit South American firms to 25% of my portfolio.

Look for low debt and cash on hand (unless you want to bottom feed on the dogs).

Here's good place to start learning about evaluation and comparison:

http://www.kitco.com/ind/matlack/nov022010_juniors.html

http://www.kitco.com/ind/matlack/nov022010.html

float shouldn't have much impact on a company. If a 1 billion dollar company has 1 billion shares valued at $1, its no different than if they had 100 million shares valued at $10. If they keep doing offerings which consistently grows the shares outstanding, then thats a problem, but this is usually not the case.

[cubical]

for the OP. you can just buy GDX or GDXJ is you want overall exposure to the sector.

[PeacePlan]

for the OP. you can just buy GDX or GDXJ is you want overall exposure to the sector.

In mining stocks one of the things I look at is where it is located. Some of them have a risk of being taken over by their governments. Also I like the Jr miners that are producing at present but also exploring. I want to know how much it costs them to get an oz out of the ground. How many shares are issued also plays into it. Be aware when you buy stocks it is just paper and the big boys can naked short sell them anytime they want to drive prices the way they want..

Much safer to buy and hold the metal

[cubical]

In mining stocks one of the things I look at is where it is located. Some of them have a risk of being taken over by their governments. Also I like the Jr miners that are producing at present but also exploring. I want to know how much it costs them to get an oz out of the ground. How many shares are issued also plays into it. Be aware when you buy stocks it is just paper and the big boys can naked short sell them anytime they want to drive prices the way they want..

Much safer to buy and hold the metal

naked short selling is not allowed. besides, if someone wants to extremely short a company with actual hard assets then they must have a good reason and it probably isn't a great stock.

[Zippyjuan]

The most important thing is do you think the company will be worth more money in the future and why. Have they shown stable growth in the past? Or are they hot/ cold- sometimes boom, sometimes down? Will they be expanding their operations? Will their output have increasing demand? Number of shares out is not relevant (as pointed out).

A high dividend can be a warning- dividened yield is the price of the dividend divided into the price of the stock. If the price of the stock has fallen, the dividend yield will go up. If they offer a dividend, do they have enough cash flow to continue to pay the dividend into the future? Have they cut the dividend in the past (not good)?

[PeacePlan]

naked short selling is not allowed. besides, if someone wants to extremely short a company with actual hard assets then they must have a good reason and it probably isn't a great stock.

You mean like the great reason the Gov might have for shorting Gold and Silver shares so there is no conformation when the spot price moves up. Is that the kind of reason you mean?


YouTube - Matt Taibbi: "Wall Street's Naked Swindle" (http://www.youtube.com/watch?v=OqZUbe9KIMs)

YouTube - Exposing Naked Short Sellers; Stopping Manipulative Traders (http://www.youtube.com/watch?v=xbEH2OZiZW0)

YouTube - Wall street's Naked short Swindle, $3.87 trillion dollar lawsuit. (http://www.youtube.com/watch?v=pN8xp66k-is)

[Dripping Rain]

great thread. Cant wait for the SM wizs to show us the way

[MelissaWV]

For the life of me, every time I read the thread title I think it says "What do you look for when evaluating socks?"

Anyhow, random bump. Carry on.

[cubical]

You mean like the great reason the Gov might have for shorting Gold and Silver shares so there is no conformation when the spot price moves up. Is that the kind of reason you mean?



Yes, ur telling me the government has shares of HL and SVM short on their books? You don't need to short most silver miners naked anyways. There are plenty of shares. If a company is making $5 per year and someone is shorting it to sit at $15, it wont last long and you should be buying at those levels.

[PeacePlan]

Yes, ur telling me the government has shares of HL and SVM short on their books? You don't need to short most silver miners naked anyways. There are plenty of shares. If a company is making $5 per year and someone is shorting it to sit at $15, it wont last long and you should be buying at those levels.

You don't get it at all do you. When you short the mining stocks it sends those stocks lower. Part of the TA on mining stocks is when gold or silver make a move to the upside they look for conformation of that move from the miners. If they are naked selling them it helps them control the price of the metal and that falls and causes the miners to be sold even more. Yes I know in your perfect world where you seem to believe these people must buy them back it all works out right. It used to be they had to have stocks to short by borrowing them - well when is the last time someone asked to borrow and short your stocks. That used to be a way you coukld hedge and if you planned to hold on anyway borrow your stock and recieve a small fee for doing so. I was always taught it was a nono to sell what you don't own or have. I would have no problem with most short selling if they did really borrow the stocks - they don't. I do have a problem with someone coming into a stock I just bought and they decide to short it and don't own or borrow it.

The stock market is just another paper game IMO - You trust them and I don't.

[PeacePlan]

One other thing the gov does not have it on their books. But Goldman runs the Gov.. Hell the Fed just started printing 600 billion and that did not go through Congress or get passed. The Gov allows them to do it and the Constitution says nowhere I can find that some private company can print money.

Tell me how they can have shorted more stocks in one company than exist. Say a company has issued a million shares how can there be 2 million shares sold short? It happens all the time!

[cubical]

One other thing the gov does not have it on their books. But Goldman runs the Gov.. Hell the Fed just started printing 600 billion and that did not go through Congress or get passed. The Gov allows them to do it and the Constitution says nowhere I can find that some private company can print money.

Tell me how they can have shorted more stocks in one company than exist. Say a company has issued a million shares how can there be 2 million shares sold short? It happens all the time!

I am a trader. I could short thousands and thousands(probably millions) of many silver stocks for FREE, and I am just 1 small trader. During the market crash a few stocks might have been short more than their float, but when has it happened since they banned it? Saying goldman does the governments work is just a conspiracy theory. When there is legit evidence they are shorting silver stocks for the government I will listen. And what are you talking about in regards to TA anyways? When silver has been moving up, most of the miners have been moving up MORE than the metal. Where is the manipulation there?

[PeacePlan]

I am a trader. I could short thousands and thousands(probably millions) of many silver stocks for FREE, and I am just 1 small trader. During the market crash a few stocks might have been short more than their float, but when has it happened since they banned it? Saying goldman does the governments work is just a conspiracy theory. When there is legit evidence they are shorting silver stocks for the government I will listen. And what are you talking about in regards to TA anyways? When silver has been moving up, most of the miners have been moving up MORE than the metal. Where is the manipulation there?

You can only short if you have a margin account and that margin account may be called in on you if it goes the wrong way.

I agree at this point and time they are moving together. Much of it has come after the CFTC meeting where Andrew McGuire said they were manipulating the market. It is against the law to intentionally manipulate markets - that is law - you seem to think it does not happen.

[cubical]

I can only short in a margin account, ok, whats the point? I know manipulation occurs in the markets, though its tough to actually say what is manipulation. I don't know where you get the idea that miners are manipulated down as gold or silver goes up.

http://finance.yahoo.com/echarts?s=GDX+Interactive#chart8:symbol=gdx;range= 1y;compare=gld;indicator=dividend+volume+rsi;chart type=line;crosshair=on;ohlcvalues=0;logscale=off;s ource=undefined

miners have been moving with PMs before the CFTC stuff started coming out. Stocks of actual companies are not just pieces of paper like you claim.

[Inflation]

float shouldn't have much impact on a company. If a 1 billion dollar company has 1 billion shares valued at $1, its no different than if they had 100 million shares valued at $10. If they keep doing offerings which consistently grows the shares outstanding, then thats a problem, but this is usually not the case.

Number of shares outstanding matters for things besides the simplistic calculation of market cap.

Leverage is the first, most obvious thing affected by a tight or loose share float.

Everything else being equal, an investor would prefer to own fewer, more valuable shares than more diluted ones.

[cubical]

Number of shares outstanding matters for things besides the simplistic calculation of market cap.

Leverage is the first, most obvious thing affected by a tight or loose share float.

Everything else being equal, an investor would prefer to own fewer, more valuable shares than more diluted ones.

i do not understand. can you explain.

[Inflation]

i do not understand. can you explain.

Consider the two extremes.

Firm A, with 1 billion shares at $1 each, must rely on almost a billion potential shareholders to buy and hold in order to force the stock price up.

Firm B, with 4 shares at $250,000,000 each, only must rely on four or less shareholders to buy and hold in order to force the stock price up.

Market caps are equal, but stock dilution destroys Firm A stockholders' leverage by shifting the supply curve of Firm A stock.

Firm B's tightly held stock enjoys a much more vertical (inelastic) supply, and needs far less volume to make a move up.