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The Essentials I Insist on When I Commend a Potential Winner to You.

By Malcolm Stacey | Saturday 14 October 2017


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Hello, Share Chuckers. As I bring you promising companies which may have escaped your notice on office days, there’s time to explain my general methods at the weekend. I can’t expect you to follow my various suggestions unless you know my lines of thought. So, for those of you wise enough to subscribe to this essential website, here goes.

We can all read a balance sheet, but it is always a historical document. And the wiser share-shifter looks to the future. Just because a company has done well last year, doesn’t make it a good bet this year.

The world has never changed so fast as it does now. Today’s whiz-bang, up-to-the-minute great idea is tomorrow’s Betamax.

The oil price is a big driver of shares, so we need to make an educated guess about how high it will go. We also need to study trends in the housing market, not the last set of figures from Barratt  (BDEV) or Bovis (BVS).

But there a couple of signals in the current ‘fundamentals’ of a company which I prize more than any others. The PE ratio tells me how cheap the share is. And I also check the operating profits over the last five years. If those gains have risen a lot for each of those years in a row, I would consider it very bad luck to see a fall on the sixth year.

By the way, a high PE ratio is justified if the company concerned throws in its lot with the future. And I especially perk up if that firm has anything to do with the next big bang in Shareland - artificial intelligence.

As well as that thrilling field, many of my suggestions for you are pioneering pharmaceuticals. We all know the population becomes more rickety as it gets older, fails to exercise, due to modern living,  and eats junk. So the need for cures is increasing as fast as the number of new leads being followed by the pioneering medics who crave our investment support.

All you need to do, gang, to make money from shares is to apply heavy brain power to work out what you think will happen to spending habits in the next ten years. And then choose only those companies that seem to fit your expected pattern of events. 

The other big thing, of course, is to avoid like a vampire who enjoys Coronation Street, those companies that my investigative colleagues so expertly dissect on this lovely website.

If you want to meet some of those dedicated professionals, you’ll find them in the Punter's Return. God bless.


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