Somethings stocks can get into trouble in unexpected ways. One thing I keep an eye on is the relationship between long term debt and stock's market capitalization. Another item I keep an eye on is the relationship between Goodwill and Intangibles and the stock's market capitalization.
If the long term debt is equal, above or very close to the stock's market cap in a normal market, this might be a signal that the stock is in trouble. It might be a signal that the company is financially weak. In any event, this is not a good sign.
I track the relationship between a company's Goodwill and its Intangibles and the stock's market capitalization. If a company's Goodwill is greater than the stock's market cap, this may be a signal that the company needs to or will do a write down of the Goodwill on its books. When the Goodwill and /or Intangibles are greater than market cap, it would seem that the market is not valuing these items as much as the company. This is also, not a good sign.
If either of these things happens to a stock you own, you should take a good look at the company to see if it is in trouble.
On my other blog I wrote yesterday about Hammond Power Solutions Inc. (TSX-HPS, OTC- HMDPF)... learn more. Tomorrow, I will write about IGM Financial Inc. (TSX-IGM, OTC-IGIFF)... learn more on Friday, June 3, 2016 date around 5 pm.
Also, on my book blog I have put a review of the book The Fortunes of Africa by Martin Meredith learn more...
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk . The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter.