Evaluate a Stock

The blogger of Savvy New Canadians talks about How to Evaluate a Stock before Investing on his site of Savvy New Canadians.

I tend to look only at dividends stocks. I look at dividend yields and its growth plus Dividend Payout Ratios (DPR). I also look at total return over many years. Looking at dividend yields and growth with the total return helps me to determine if I want to continue to look at a stock.

After than I am looking at Debt Ratios. Things like Long Term Debt/Market Cap Ratio, Intangibles/Market Cap Ratios, Liquidity Ratio, Debt Ratio, Leverage and Debt/Equity Ratios.

I look at growth rates for things like Revenue, Adjusted Earnings per Share, Net Income, Cash Flow, Dividend Growth and Stock Price Growth.

Next, I look to see if a stock is selling at a reasonable price, or not. I think the most important one is current dividend yield compared to the 10 year median dividend yield. I like to have this test confirmed by looking at the Price/Sales Ratio compared to the 10 year P/S Ratio. I also look at the current dividend yield compared to the historical median dividend yield.

I consider the current Price/Book Value Ratio compared to the 10 year P/B Ratio. I look at the Price/Cash Flow Ratio compared to the 10 year P/CF Ratio. I look at the Price/Graham Price ratio compared to the 10 year median P/GP Ratio. I look at the Price/Adjusted Earnings per Share Ratio compared to the 10- year median P/AEPS (if there is one). I look at the Price Earnings per Share Ratio compared to the 10-Year P/E Ratio.

I like to buy good dividend growth stocks at a reasonable price. It is nice to buy cheap, but that generally is not possible.

On my other blog I wrote yesterday about Transcontinental Inc (TSX-TCL.A, OTC-TCLAF) ... learn more. Next, I will write about Enghouse Systems Ltd (TSX-ENGH, OTC-EGHSF) ... learn more on Wednesday, January 24, 2024 around 5 pm.

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.

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