Print
Investment Clubs for Dummies Stock Watcher Form
Company Information
Stock Watcher’s Name: 
Current Date: 
Company Name: 
Ticker: 
Recent Price: 
Brief Company Description: 
Date of Latest Quarterly Announcement: 
Expected Date of Next Quarterly Announcement: 
Company Fundamentals
Sales Growth & Trends: 
Pre-tax Profit Margins Growth & Trends: 
EPS Growth & Trends: 
Management's Ability and Competence: 
Summary of Recent News: 
Valuation and Recommendation
Current Valuation: 
Future Outlook: 
Recommendation: 

How to Use The Stock Watcher Form

Most of the information on this form is available from the same sources and Web sites you use for stock research. One of your primary sources of information will be the company's annual and quarterly reports filed with the SEC's EDGAR (http://www.sec.gov). EDGAR gives you access to the Form 10-Q (quarterly) reports filed by the company about 45 days or less after the close of its quarter. Form 10-K (annual) reports are due to be filed within 90 days after the close of the company's fiscal year.

Stock Watchers can make good use of press releases and news stories available from the company web site or from Yahoo! Finance (http://finance.yahoo.com). Your club might also ask Stock Watchers to read business publications such as The Wall Street Journal, Barron's, Business Week, Fortune and Forbes to search for positive or negative stories about the company, its management, and its industry and competitors.

Here are some of the points that Stock Watchers should cover in their regular presentation to the club.

Sales growth
Over the long term, companies cannot grow their profits (earnings) without growing revenues. Stock Watchers can explain to the club the results of sales or revenues from the company's most recent quarterly report as well as the reasons for any changes, either positive or negative. What are the trends in the company's revenues or sales growth? Is the company introducing new products or services, or is division experiencing a decline in sales?

Earnings per share (EPS) growth
Your stocks should be growing their EPS on a consistent basis. How has the company fared in its most recently completed quarter? Are earnings up, down, or flat from last year at this time? What are the trends of the company's earnings per share growth? If the company has increased earnings, is it because of increased growth or decreased expenses, or a combination of both? If the company has experienced a loss, what are the reasons for it and what are the company's expectations for turning a profit in the future? Did the company have any one-time charges or income that affected EPS?

Pre-tax profit margins and growth
A company's pre-tax profit margins are one of the best early warning signs for letting you know when a company is having trouble. A company with six consecutive quarters of declining profit margins is a prime candidate for replacement. From the company's most recent quarter report, describe how the pre-tax profits have grown or shrunk, and identify trends in the company's pre-tax profit margin. (You can calculate the pre-tax profit margin by dividing the company's net profit before taxes by revenues.) If margins are shrinking, what is the reason for the contraction?

Management's ability and competence
Based on the company's recent performance, is its management exhibiting strength and competence? Have there been any recent changes in senior executives?

Breaking news
Summarize current news stories about the company as well as any press releases it has issued. What is the impact of this news on the company's long-term and short-term outlook? Has the company launched any new initiatives, or are they having problems in a division?

Current valuation
What is the stock's current price and P/E ratio? How does this compare with the stock's price and P/E ratio when you purchased it? The Stock Watcher should also complete NAIC's Portfolio Management Guide (PMG) each month with price, earnings, and P/E ratio information. The PMG displays the relationship of the stock's current price and P/E ratio on a graph so you can quickly see if the stock is over- or undervalued.

Future outlook
What is the company's outlook in the next six months? What is the company's long-term outlook (over the next five years)? Has your outlook changed since the club bought the stock or since your last report?

Overall recommendation
Should the club sell all or a portion of its holdings, hold tight for now, or buy more shares? It's the Stock Watcher's job to recommend whether the club should take action or sit pat.

For more help on managing your club's portfolio, read Investment Clubs for Dummies by Douglas Gerlach and Angele McQuade, published in December 2001 by Hungry Minds, Inc.

    © Copyright 2002 Douglas Gerlach. All Rights Reserved.