Income Statement Analysis Walkthrough

January 20, 2009 | Read Now

Previously we had a look at the Statement of Cash Flows with AeroGrow and another discussion on Free Cash Flow and points to consider as investors. In this post, let’s take a look at the Income Statement for Crocs (CROX) and try to find warning and other signs.

To help get new investors started, here are some great resources to get you started on the Income Statement


Costco Stock Analysis

January 19, 2009 | Read Now

Today we have an excellent post by Brad Ferris of Triaging My Way To Financial Success. After a mentorship and […]


Forbes Best Small Companies: Finale

January 14, 2009 | Read Now

This is final post in the search for the best small companies from the 200 listed in Forbes 2008.

You can refer to the previous results here: 1-15 | 16-32 | 33-70 | 71-130 | 131-160

The companies ranked 161-200 has yielded 5 results.


Best Long-Term Dividend Stocks

January 12, 2009 | Read Now

In his book, Stocks for the Long Run, Wharton Professor Jeremy Siegel proves that stocks have been the best performing investing for the past 200 years in the US. Equities outperformed other assets classes such as gold and fixed income. Typically, stock returns are derived from price appreciation and dividends. Dividend payments have historically accounted for 40% of the average annual stock market return. A lesser known fact is that reinvested dividends have provided for 97% of historical stock market returns.


Investing Book Review: The Art of Short Selling

January 6, 2009 | Read Now

The Art of Short Selling, by Kathryn Staley, is by no means about short selling. If I had to sum it up in a few words, I would say the book is focused on hardcore fundamental analysis. It points all readers in the direction of discovering and analysing fundamental problems with a company. The book clearly states that one should never short a good company with temporary issues or just because a company seems overpriced.

There is no mention of technical analysis, trends or volume. The true method of short selling described is based on an extremely detailed fundamental analysis, which is why I immediately purchased the book. The book describes everything that enterprising investors should do.


Dividend Investing Process: Dividends4Life

January 3, 2009 | Read Now

Every investor has a unique process that they follow when buying and selling stocks. In the past, I have written […]


Free Cash Flow, Capital Expenditures and Tax

December 28, 2008 | Read Now

I wanted to add some additional points on FCF which I brought up in analysing the Statement of Cash Flows before moving onto the future posts on balance and income statements.

Tax Adjustments

If a company receives a tax deduction when employees exercise their stock options, does this count as cash from operating activities? Or if the company defers its income taxes to a later period, does this count as cash from operations? I don’t think so.


Discounted Cash Flow & Stock Valuation

December 14, 2008 | Read Now

The purpose of the Discounted Cash Flow (DCF) method is to find the sum of the future cash flow of the business and discount it back to a present value. I use the F Wall Street method of valuing a business along with some tweaks here and there to suit my tastes.

The advantage of this method is that it requires the investor to think about the stock as a business and analyse its cash flow rather than earnings. The first and foremost reason a business exists is to make money where money = cash, not earnings. Since cash is what a business needs in order to maintain and grow its operations, it’s only right to consider the possibility of its future cash growth rather than earnings growth.


How to Master Analyzing the Cash Flow Statement

December 3, 2008 | Read Now

In this post, I’ll be going over a few basic ideas of what to look for financial statements, not how to read them, for the beginner investor who wants to research or keep up to date with their companies. AeroGrow (AERO) will serve as a very nice example with plenty of warnings signs.

The purpose of this post is to help you get the idea of a company’s health and let you decide whether it is worth the extra effort to take the next step and plug in numbers for ratios and other metrics.

FYI, I exited my position in AeroGrow with a huge 60% loss even though I had the opportunity to lock in a 20% gain. I made many mistakes on this one (let’s just conclude I didn’t even read the statements to begin with) and you will see why I had no other choice than to sell once I woke up. Hopefully, you won’t make the same mistake as me.


Morningstar Vs Old School Fair Value Estimation

November 19, 2008 | Read Now

Until Nov 21, you have access to all the premium content on Morningstar. Quickly sign up (no credit card required) or log in now! Go go go. Thanks to Contrarian Value Investing for the notice.

I’ve also made a quick comparison between Morningstar fair value and my fair values.


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