An easier way to that approach would be to first screen the entire ASX for stocks which meet your financial criteria.
For example, you might want (picking random things here just for example and not a recommendation) to find only those stocks which:
Pay dividends at a rate exceeding x% return per annum
Have a P/E under whatever amount
Have a trend of increasing earnings over the past x years
...
Where to start, that's the issue for most.
First thing is are you an investor who is willing to sit on a stock and hand it down to your kids after you collect the dividends along the way, or are you willing to buy into a company and hold it for a period of time and exit when either the fundamentals or the price changes. Both of those go hand in hand and probably 99% of people on here adopt the latter method but hate to be referred to as traders.
If you want to see an example of a Mum and Dad investment type stock then look at TLS, an ASX top 20 stock whose profit this year is the same as it was at this time ten years ago and the stock price is the same now as it was in March 1998 (factor in CPI and inflation since then !!)
Possibly a great stock to hand down to your kids after you have tied up your savings to collect the dividends.
That's one way to go.
Another way that I prefer while going back to smurf's post above (highlighted bit) is to screen the market but for stock price behaviour as that will in turn usually reveal changes, or potential changes to stock fundamentals.
You can buy fundamentals but only at the
price that is going at any point in time and this where price behaviour is a barometer of both sentiment and fundamentals.
There is always a reason behind why the price of a stock will change. When I find stocks by scanning and then looking at chart price behaviour I may have a dozen candidates but only need two or three, how to decide is the issue.
I will run through an example of one that worked, not all of them do but if you can back up a price behaviour with some basic support information it will most likely make that stock stand out from the rest and lean the odds in your favour.
The stock I will use as an example is WHC, weekly chart below. I prefer weekly charts for three reasons, one is that it smooths out daily gyrations, two, if the new trend stays intact for a week then it may be significant and thirdly if it is just daily trade activity that has caused an overreaction during the week may also be evident in that weekly bar behaviour or in the opening day of the week that follows which is also where you would be considering an entry.
In the case of WHC, it pops up in a scan, looks like a new trend but it has done this twice on the way down and failed both times. Why should this time be different.
Scared to say it but lets have a very simple look at fundamental basics, what does WHC do and is there anything that could have an effect.
WHC produces coal, great, I can oppose the loonies and greenies in one hit. (loonies = baristas with taxpayer funded degrees in arts, humanities and women's studies who are now experts on climate change and immigration)
Next, what is happening with coal, China cutting production by reducing production days from 360 to around 260 and coal price, on the way up, coming off a low with a valid reason.
Done, there is one candidate for Monday based on sufficient fundamental (no need to argue over how to calculate P/E ratios
)
Buy in on Monday, do a bit of a Google on coal prices during the week (whaaaat- $100 per ton by Xmas - Yay
).
http://www.indexmundi.com/commodities/?commodity=coal-australian¤cy=aud
That is one way of doing it, not for everyone but after many years I always end up back with the KISS principle.
That's my
This is not intended as a TA vs FA argument starter, just a way of showing that it can be kept simple.
My history indicates that it only works about 48% of the time but still gives a win/loss of about 2.8/1.0.
The profit is in the exit plan when I get it wrong.
Another way of achieving an outcome is to calculate all of these items that are in a fundamental analysis spreadsheet I was sent, I tried using it twice only !!...
P/E: Price/Earnings
ROA: Return on Assets
ROE: Return on Equity
EPS: Earnings per Share
YIELD: Dividend Yield
CATAI: Current Assets to Total Tangible Assets
CBTA: Cash Balance to Total Assets
CBTL: Cash Balance to Total Liabilities
CLTL: Current Liabilities to Total Liabilities
CTCCL: Change in Total Cash Flow to Current Liabilities
OCFTAI: Operating Cash Flow to Total Tangible Assets
OCFCL: Operating Cash Flow to Current Liabilities
PDACL: Profit before Depreciation and Amortisation to Current Liabilities
QACA: Quick Assets to Current Assets
QLCL: Quick Liabilities to Current Liabilities
RPTAI: Retained Profits to Total Tangible Assets
TLTAI: Total Liabilities to Total Tangible Assets
(My WHC screener scan response chart - click to expand)