Please don’t think that the metrics I use are gods gift. But I...

Please don’t think that the metrics I use are gods gift. But I use them as a rule of thumb to check out seemingly healthy stocks BEFORE I then check the timing on a chart.

Step 1. Go to Research and historical financials on your broker site for your share. See if it has a history of EPS growth.

2. Then look at the number of shares on issue to make sure they have remained fairly stable and that they haven’t had a SPP or a capital raising and expanded the # of shares. A share expansion could indicate they need funds.

3. Then go to their Operating Margin to make sure that, that has remained consistent and that they don’t appear to be cutting prices to attract customers. 4. Check that their long term debt hasn’t blown out and has either stayed the same or reduced, and finally check and see if the companies ROE, ROA or ROC are healthy. XRF is an EXCELLENT example to check and it’s now my biggest holding, probably scarily so !

What my metrics do is to ensure a company is making a profit, that it’s EPS are growing, that it hasn’t needed to raise funds (indicated by the # of shares on issue and the long term debt) and finally that they are making good returns on their available assets or funds. Once these have been satisfied, I then go the charts for timing. SNL (Supply Network) is another good example. I first heard about the importance of EPS growth by a fund manager who was looking at JBH where the SP was fluctuating wildly, but the EPS growth continued. JBH has had a little bit of a blip as at Jun 24, but you would have been rewarded handsomely by still holding. XRF has rewarded me in the same way despite the stock not being widely covered by analysts. What my metrics do is to eliminate those stocks that do not make profits and do not have increasing EPS.