3 useful tools for value investing

(This article is a follow up on the “step 4” of my previous article on stock screening <= [click here to read it])

I often get asked questions on how I research on individual stocks before deciding to invest in them. Although there are many possible approaches, I’d like to introduce 3 useful tools for researching individual stocks.

(1) Yahoo Finance: Financials

Although I like Bloomberg the best to look into company’s financials, it is not available for average investors. Instead, we can use yahoo finance to find a summary of the stock & the company’s information. Go to the website and search for the company’s name or the stock ticker.

Capri.png

If you click the “Financials” tab, you can find the summary of the company’s financials (balance sheet, income statement, cash flow statement). I’d normally look at the cash flow statement to see the company’s historical free cash flows. Unfortunately, yahoo finance doesn’t show free cash flow, you can get the rough estimate by [Total Cash Flow From Operating Activities - Capital Expenditures].

You can see that the company has stable free cash flows, hovering around $1Bil for the last 3 FYs.

You can see that the company has stable free cash flows, hovering around $1Bil for the last 3 FYs.

(2) IR (Investor Relations): Events & Presentations

Most publicly listed companies have investor relations (IR) page in their company’s website. You can find most of the information about the company in the page.

The top of the Investor Relations page of the Capri holdings.

The top of the Investor Relations page of the Capri holdings.

Even though it’s not always available, I especially like looking through the events & presentations section of the IR.

In the presentation, you can find useful information for analyzing the business. It makes it easier to grasp the company’s financials, growth prospect, risk characteristics, etc. as the presentations provide a lot of visuals.

In the presentation, you can find useful information for analyzing the business. It makes it easier to grasp the company’s financials, growth prospect, risk characteristics, etc. as the presentations provide a lot of visuals.

(3) Financial Statements / MD&A

To find detail information of the company’s business and financials, you need to find the annual report/quarterly financial report/MD&A of the company. Please be aware that the reports are called in different names in some countries and the reports are filed in different websites.

  • Canadian

    For Canadian companies, you can find reported documents of publicly listed companies in the website called “SEDAR”. You can search the company name and find the financial statements and MD&A, which discusses the company’s business activities, risks, etc.

  • American

    For American companies, you can find reported documents of publicly listed companies in the website called “EDGAR”. You can search the company name and find the 10-K or 10-Q, which discuss the company’s business activities, risks, etc.

  • Japanese

    For American companies, you can find reported documents of publicly listed companies in the website called “EDINET”. You can search the company name and quarterly/annual securities report, which discuss the company’s business activities, risks, etc.

The three tools above should help you have most of the information you need to analyze the company’s business & financials, come up with a cogent investment thesis and make a sound investment judgement. If you are still not confident in making your own decisions, follow my blog and stay tuned on more tips and recommendations!