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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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