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'Top
Down' Investing 2 of 5
For
top-down investors, REFS on line not only provides
you with a list of tables, such as ‘Low PEGs for growth
companies’, but also gives you the ability to do a ‘power
search’ by enabling you to set up and save your own
tables and top down searches using multiple criteria.
For
example, you might combine multiple criteria, such as a low PEG of
less than 0.75, an EPS growth rate of over 20%, a PER of
less than 20 and positive relative strength over the last
year. The resulting lists of candidates should provide interesting
ideas for possible investments. You can additionally filter
the shares by sector and stock market indices.
Technical
Analysis
For investors
keen on technical analysis the tables of shares with high
relative strength over the last month and last year are
an obvious source of potential investments. Conversely,
the tables of shares with low relative strength highlight
possible selling opportunities.
Once
companies have been short listed, the fundamentals and detailed
brokers' estimates can be checked in the company entry as
well as any directors' dealings over the last six months.
Value
Analysis
Value
analysts should be in paradise with the array of tables in
REFS on line. The main points of obvious interest are shares
with the lowest price-to-tangible book values, the lowest
price-to-cash flows and lowest price-to-sales ratios. You
can either click on each of these pre-defined tables or
as explained above do your own ‘power search’ using
multiple criteria.
Again,
as soon as a list of candidates has been established, the
company entries provide further essential information. Before
reaching a final decision, the last few Annual Reports, brokers'
circulars and press cuttings should be studied in detail.
High-Yielders
The table
of shares with the highest dividend yields, another pre-defined
table within REFS on line, is the obvious prime source of
information for those investors who concentrate on high
relative yield.
Growth Stocks
REFS
contains several very interesting sources of information for
growth investors:-
1.
The tables of shares with the best one month and
one year relative strength. These highlight fast-moving shares
that are performing best (and therefore, so it is argued,
are likely to continue to do so).
2. The tables of shares
with the highest growth rates for growth companies are always
worth a quick look and sometimes provoke interesting ideas.
They highlight the companies that are forecast to increase EPS dramatically
in the twelve months immediately ahead.
3. The
table of ‘Lowest PEGs for growth companies’
is Jim Slater’s preferred hunting ground for finding
attractive growth shares. PEGs are two-dimensional,
telling you exactly how much growth you are likely to get
for the PER you are paying. The table has been specially
designed to show other key investment measures, such as past
year and past month relative strength, the ratio of cash
flow to EPS, ROCE and changes in the consensus forecast during
the previous month.
4. You can filter by
sector, which gives an instant fix on the financial attractions
of all the companies in a particular sector. A detailed study
of them will often highlight an anomalously priced share.
5. The detailed company
entries show directors' dealings over the last six months
and reveals whether there has been recent cluster buying
or selling.
6. The detailed company
entries also show brokers' consensus forecast changes over
the last month and last three months. Major upward revisions
take time to be fully reflected in share prices. Major downward
revisions are also of interest but the reaction to them is
often more immediate and sometimes savage.
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