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I am extremely excited to announce my new e-book, SOLID STOCK SELECTION is now available !! Click here to find out more.
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6/4/06 Comparing Stocks This week’s letter is on comparing investment choices. You can use information about another company to help analyse an investment (or potential investment.) This might sound a bit confusing at first, but it really makes a lot of sense in the end. If you are considering investing in an oil company, - a popular idea with today's rising oil prices - you need to see how your particular choice stacks up against the competition. To follow along, I would suggest opening a browser and looking at Yahoo Finance, selecting COP as the company symbol. After entering COP you can look at the left column and select "profile." In the profile you will see that the industry COP is associated with is "Major Integrated Oils and Gas." If you then go into the "Leader and Laggard" section (Click here) you can see the companies that are leading that field. You can than use those symbols to compare to your selection and see how it stacks up. To illustrate this (it's not as hard or complicated as it sounds) Go to Yahoo Finance Technical Analysis for Conoco and type XOM in the "compare to" space. You will get a chart that looks like THIS. This wasn't all that tough. We looked for the industry leaders using the Profile -> Industry ->Leaders/Laggards, and found Exxon (XOM) to compare to Conoco (COP) The chart shows (on the date this was done) that Conoco is doing better than Exxon on gain in stock price. This does not tell us that Conoco will continue to beat Exxon on price gain, but does show that historically Conoco does stack up against one of the industry leaders. (As of the date I am writing this Conoco is on top the leader board. It also happens to be a stock that fits my profile of a "buy." ) I hope that wasn't too complicated to follow. If it was, please send me an e-mail and I will attempt to clarify. The point I want to make here is that you can and should use the compare function to see how your selections fare when compared to other companies in the same sector. It can give you an idea of the relative strength of your investment. On another subject, I had two questions on REITs from last weeks letter. The first question concerned building upkeep and tenant management. The trust takes care of all the headaches of being a landlord. That is one advantage of the REIT over owning the property first hand. The second question was 'how do you make money on a REIT?' The money comes from profits made on the properties. Profits after the expenses are generally either distributed or re-invested depending on the particular REIT. Another way to gain money on a REIT is on share price rising due to appreciation of properties. All these need to be examined when first checking out your particular REIT. Different companies operate under different guidelines depending on the direction and purpose of the REIT. Hope that helped clear things up and thanks for the questions. Keep 'em coming! Rob
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Want a scholarship into the Millionaire Mind Intensive worth $2590? http://www.secretsofthemillionairemind.com The columns, articles, message board posts and/or any other features provided on Wealth Training Source are provided for personal finance and investment information and are not to be construed as investment advice. Under no circumstances does the information in this content represent a recommendation to buy, sell or hold any security. The views and opinions expressed in an article or column are the author’s own and there is no implied endorsement by Robert Britt of any advice or trading strategy copyright Robert E. Britt 2006 |
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