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    Stocks - r/Stocks Fundamentals Friday Nov 23, 2018

    November 23, 2018

    Stocks - r/Stocks Fundamentals Friday Nov 23, 2018

    r/Stocks Fundamentals Friday Nov 23, 2018

    Posted: 23 Nov 2018 09:06 AM PST

    Feel free to ask questions or talk about (not argue against) fundamentals such as tools, terms, and other important aspects of the investing world. But before you do see the following:

    Important/Basic Terms:

    • Market Cap - The total market value of a public company's outstanding shares. It can be found by multiplying the total number of outstanding shares by the price of a single share. For example, a company with 1,000 outstanding shares each priced at $5 a share would have a market cap of $5,000. Market cap is extremely important and should be used when valuing/researching a company instead of individual share price. See here for the difference between large, small, and micro cap stocks.

    • Shares Outstanding - The total number of shares held by all shareholders vs shares float which are shares available to trade.

    • Volume - Volume is how active a particular company is over a period of time in terms of trading; in other words, the number of shares that are being traded. Typically, you want to look for companies with high volume to avoid issues with liquidity and other reasons. However, if volume is much higher than the average volume in a given period, you may see wilder swings (good or bad) and volatility.

    • Dividend - A scheduled payout from a company. Dividends are used to reward investors for investing in a company. They can be paid monthly, quarterly, yearly, or on a one-time special basis. Dividends are often issued by mature companies but also companies with limited growth, REITs, and struggling companies trying to attract investors or keep current ones happy. Dividends can be great, especially for income investors, but it's important to note that they can limit growth and aren't tax efficient (you're forced to pay taxes on dividends vs just holding) when held outside a tax advantaged account. Never invest in a company solely for its dividend.

    • EPS - The amount of profit allocated to a share of common stock. This can be found by taking Net Income - Preferred Dividends/Weighted Average of Common Shares. EPS is very important in determining how successful a company is performing and where it stands in terms of profitability.

    • P/E Ratio - Stock price divided by EPS. High P/E typically indicates expectations of high growth. This is why we see companies like Amazon with relatively high P/E's. Low P/E's may indicate a company is pretty mature and that limited growth is expected. There are also formulas for trailing P/E and forward P/E.

    • EPS Q/Q - A way of measuring a company's growth rate by taking this quarter's EPS and comparing it to last years EPS for the same quarter. EPS Q/Q of 20% tells us that the stock is earning 20% more than last year while factoring in their stock price.

    • PEG - PEG ratio is used to determine the value of a stock while taking into account growth of a company's earnings. The formula for PEG ratio is a little more complex than some of the other ones we have here, but click here if you're interested.

    • Sales Q/Q - Sales is another word for revenue and doesn't factor in stock price like EPS, but is an important metric for growth, especially when a new stock is in the early stages of expansion and probably has a net loss. A net loss means a stock won't have a P/E or PEG hence sales q/q's importance.

    • Return on Assets (ROA) - Net Income/Total Assets. This formula provides a clearer picture of how well a company is managing its assets to generate earnings and ultimately profitability. Some companies will have low ROA by the nature of their business such as bank stocks.

    • Return on Equity (ROE) - Net Income/Shareholders Equity. This formula can be used to get a better idea of future growth, how debt is impacting things, and how the company compares to its peers in the industry.

    • BETA - The measure of volatility and risk of a company compared to the market as a whole. A stock with a BETA of 1 means that it will likely act similar and correspond with the market. A stock with a BETA lower than 1 typically means less volatility is expected while a stock with a BETA higher than 1 means it could potentially more volatile. These things aren't set in stone and companies can react and perform quite differently than what their BETA would initially indicate.

    • SMA - The moving average of a company's stock price over a specific period of time. SMA can be used over different periods of time and can help paint a better picture of where a company stands in terms of performance over the past few weeks/months; 50 and 200 days are common periods of time to use with SMA.

    Each of these formulas/tools are important and unique in their own way. However, no single one can be used to successfully invest alone by just itself. Instead, think of them as only a piece of a big puzzle that make up something bigger. In addition to knowing what these terms mean, it's also important to understand why they look the way they do as they can sometimes be misleading without further understanding. For a example, if dividends are 3 and EPS is a negative number, then a company might need to issue debt to keep up with the dividend payments which is bad for long term growth.

    The importance of quarterly earnings:

    At the end of every quarter, public companies will make sure everything is more or less up to date and correct; they will have their accounting teams put together things like a balance sheet and income statement for shareholders. They will often provide a run down of how things went in the most recent quarter and what kind of outlook/guidance they see moving forward. These run downs are typically under highlights in the earnings release and are always mentioned in the live conference call which investors can listen in.

    Don't be overwhelmed by all the terms here, it's a lot of info to take in and understand. Instead, look them over and take advantage of some of the great websites available out there for learning this stuff. For some great sites/tools you can use to learn about these terms, follow the market or specific companies, and aid in your investing check out the following links:

    If you have a basic question, for example "what is EBITDA," then google "investopedia EBITDA" and click the Investopedia article on it; do this for everything until you have a more in depth question or just want to share what you learned.

    See our past daily discussions here. Also links for: Technicals Tuesday, Options Trading Thursday, and Fundamentals Friday.

    submitted by /u/AutoModerator
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    Has Overstock ($OSTK) just committed company suicide?

    Posted: 23 Nov 2018 09:06 AM PST

    They sold off their original business and have invested fully into crypto/blockchain. In what world is this a smart move? They were already bleeding so much cash and now they decide to invest in a rapidly declining financial instrument? This makes no sense to me in any context. I hope I'm not alone.

    submitted by /u/TruePhilosophe
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    Patriots one technology. Anyone in it?

    Posted: 23 Nov 2018 03:39 AM PST

    I literally found them today and couldn't be so much excited esp a deal with Cisco. I only see up potentials but I want some of devil's advocates.

    submitted by /u/redsoxo4
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    Just set up my first TDAmeritrade, what now?

    Posted: 23 Nov 2018 09:13 AM PST

    Was able to put $4K in there, my dad sent me a couple sites he uses and told me insurance companies are very safe stocks to buy. Are there any must buys. I have little to no knowledge of the market but I plan to read more about how it works and what to buy

    submitted by /u/NoSteam97
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    What do you think about NVDA now?

    Posted: 23 Nov 2018 01:05 PM PST

    I still feel they have a lot to deliver with hardly any other disrupter coming to the industry. Still holding on to the stocks.

    submitted by /u/satyapk_y12uc231
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    r/Stocks Daily Discussion Friday - Nov 23, 2018

    Posted: 23 Nov 2018 04:07 AM PST

    These daily discussions run from Monday to Friday.

    Some helpful links:

    If you have a basic question, for example "what is EPS," then google "investopedia EPS" and click the investopedia article on it; do this for everything until you have a more in depth question or just want to share what you learned.

    Please discuss your portfolios in the Rate My Portfolio sticky..

    See our past daily discussions here. Also links for: Technicals Tuesday, Options Trading Thursday, and Fundamentals Friday.

    submitted by /u/AutoModerator
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    When you own a stock, do you get paid monthly, or yearly, etc?

    Posted: 23 Nov 2018 11:39 AM PST

    I am new to stocks and all of this. When you own a stock, do you get paid monthly, or yearly, etc?

    submitted by /u/heimerdawg
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    Can people from overseas invest in US market?

    Posted: 23 Nov 2018 11:09 AM PST

    Hello guys, I'm new to stocks and I want to know if it's possible to invest in NYSE without a bank account in mainland US, I have searched in google but found nothing so far besides countries like Canada UK AU NZ, I'm from a third world country those it cut my chances to buy into stocks?

    submitted by /u/Aminecasano
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    Is my neighborhood BSing me?

    Posted: 23 Nov 2018 10:25 AM PST

    He claims to have bought 100 shares of google and 100 shares of youtube back in '06-'07. Then claims google bought youtube and youtube took off so the shares "doubled" a few times and hes pretty wealthy, on paper, because of it and pulls about $30k every 6 months from it.

    Idk anything about stocks or trading. I just want to know if hes full of shit or not.

    Is any of it plausible? Is it total bs?

    Thanks in advance.

    submitted by /u/YourMothersAss
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    Indexes compared by impact of events, news, macro factors?

    Posted: 23 Nov 2018 05:39 AM PST

    I'm looking for a comparison of stock indexes based on what events, sector news or macro factors affect them and by how much. Haven't found a concise 'cheat sheet' type presentation.

    For example, lets say the price of oil changes x%, how much is the index of SPY vs DJIA affected? Or interest rate talk, job reports, etc. Just to get a feel for index weighing of these factors. Thanks!

    submitted by /u/SpaceTraderYolo
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    Yieldco vs Parent Company

    Posted: 23 Nov 2018 01:52 AM PST

    Hey all,

    So I've been excited about NextEra (NEE) for a long time, but I just found out recently that they have a Yieldco partner (NEP) that has a much higher dividend.

    I understand that Yieldcos carry some risk, but I'm very confident that NEE will pave the way for long-term success.

    My question is: Why would any dividend investor buy into NEE when they could buy NEP?

    submitted by /u/BENshakalaka
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    Company A acquires large stake of Company B...

    Posted: 22 Nov 2018 09:58 PM PST

    I'm deciding between two renewable energy stocks I love: Brookfield Renewable (BEP) and Terraform Power (TERP). I read an article saying that BEP "acquired a 60% stake of TERP".

    What does that mean for investors trying to choose between the two? Or should I buy some of both?

    submitted by /u/BENshakalaka
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