How To Pick Quality Shares

A three-step process for selecting profitable stocks

Phil Oakley

• Publisher: Harriman House
• Year: 2017
• ISBN:
  9780857196071
• Edition: 1
• Topic: Commerce
• Subtopic: Comptabilité financière

How to Pick Quality Shares provides a three-step process for analysing company financial information to find good investments: finding quality companies; avoiding dangerous or risky companies; and not paying too much for companies' shares. Applying the in-depth techniques described here will give investors a fuller understanding of how companies really work, and an edge over other investors, including professional investors and analysts.Phil Oakley, an experienced investment analyst and private investor, guides the reader step-by-step through these three stages: 1. For the first step, he shows how to identify the kind of high-quality companies that are likely to be profitable investments over the long term. Important themes are how much a company earns on the money it invests, reliable measures of profit, and the importance of cash flow. 2. Next, he shows how to spot dangers and risks that can lead to a company that is superficially attractive turning out to be a bad investment. Here the focus is on how to analyse debt, in particular hidden debt and pension fund deficits. 3. Lastly, he shows how to value a company's shares and determine what is a reasonable price to pay to invest in that company. Phil shows why some common shortcuts to valuing shares are unhelpful, and how to use cash profits to value shares more reliably.No longer is in-depth financial data and analysis the preserve of the City. Private investors have access to all the information they need to make well-informed investment decisions. But still many investors lack the confidence to back their own judgment. How to Pick Quality Shares will give you this confidence - improving your skills and making you a more profitable investor.

Part 1 – How To Find Quality Companies

Part 1 – How To Find Quality Companies

If you are going to be a confident, self-reliant investor then you will be spending time looking at a company’s finances. The numbers in a company’s accounts are extremely valuable information. They can help you identify great investment opportunities and keep you away from bad ones.

Despite the fact that these numbers are freely available to every investor, many fail to get the most out of them. A large number of investors – even professional ones – are quite lazy.

This is where the diligent investor can gain an advantage. By spending just a little bit of time crunching a few numbers you can quickly build up a picture of how good a company is. This is the focus of Part 1. The good news is that this only requires a bit of basic arithmetic in most cases.

Chapter 1 is all about profits. It begins by explaining all the different profit numbers that a company reports before telling you which profit number you should use to find the best companies.

Chapter 2 is the most important in the book. It is about getting you to think about shares like savings accounts. You do this by calculating a company’s interest rate – what rate of return it is getting on the money it invests. You will be ...