I first read this book 3 years ago. At that time, I was in the midst on refining my fundamental analysis skill. This book has provided me a good start by giving me step by step guide on how to go about. In particular, this book demonstrates an 11-step process for complete fundamental analysis. Namely:
1. Analyzing analyst data: Not on their buy/sell recommendation but their thorough research on the company and industry as a whole
2. Valuation: To identify a company’s implied growth
3. Establishing target prices: By using Earning Per Share (EPS) and Price Earning Ratio (PE)
4. Industry Analysis: To carry out thorough study on industry generalization, concentration and competition
5. Business plan analysis: Through brand identification, barrier of entry, distribution model, assess to distribution, product life cycle, revenue stream, productivity, number of customers, product/market diversification, acquisition, etc.
6. Management quality: To study the resume of the management
7. Financial: To carry out financial analysis. The book shows a number of important analyses to detect financial tricks
8. Profitability analysis: Main purpose is to evaluate management quality
9. Detecting red flag: Through some ratio calculation
10. Ownership: To evaluate the shareholding condition of a company’s key persons
11. Price chart: To support on the right time to enter and exit as market sentiment plays in short term
I would say this is a very technical book. Readers with basic understanding on financial calculation and account knowledge will find this book very logical.
Happy reading.
Recommend Reading: “Fire Your Stock Analyst!” by Harry Domash
Reviewed by Pisstol Aer
Published :
Rating : 4.5
Published :
Rating : 4.5