Early in the Mentorship, students learn to use
ShareOwner’s proprietary ‘growth images’ to find
top stocks for their Take-Home Portfolio.
Finding a top company begins with finding a company
that has a long history of growing both its
sales and profits at consistently high rates.
A 'Great' Company
The image on the right shows the annual sales and profit
trends for one of the world’s largest manufacturers
of artificial hips, knees and related orthopaedic products.
A student can easily ‘see’ that the company’s sales
and profits have both grown at high rates (i.e. steep
trend lines), consistently (i.e. straight trends) for
the last 10 years.
That long history of strong and reliable growth –
and prospects for its continuation (i.e the dotted
lines) – indicate what ShareOwner refers to as a
Great Company. That is, one with products in
strong demand and management skilled enough to
make and sell them with consistent profitability.
Long-term investors like Great Companies because
their vigorous growth can cause strong
growth in a stock’s price.
ShareOwner equips students with the software and
database to see this and other images for over
6,000 companies traded on all of the major North
American stock markets.
A 'Great' Stock
For a Great Company to be an attractive investment,
its stock price must have a long history of
moving up with the company’s profits.
That’s the case with the orthopaedic company.
Students can easily see the stock’s annual high-low
price ranges moving ‘up’ with the company’s
profits. That’s what makes it possible for a top
stock to generate significant capital appreciation
for owners.
Students only continue their analysis for stocks
with growth images like that above. Further
study includes a review of additional images
showing trends in the company’s key financial
and operating fundamentals and identifying the
stock’s Buy Zone (i.e. $A to $B) and Sell Zone
(i.e. $X to $Y).
Abandoning an Analysis
Students learn to abandon their analysis of a
stock when they encounter growth images similar
to those below.
A 'Troubled' Company
A 'Troubled' Stock
Its easy for students to see that this company (a
world-class manufacturer of photographic equipment)
is in trouble. It has a long history with little or no sales growth and negative profit growth.
This image is for the world’s largest retailer. Students
can easily see that the stock is ‘troubled’.
That is, it’s annual price ranges have not moved
‘up’ with profit growth for six years!
Unfortunately, there are many Troubled Companies and Great Companies
with Troubled Stocks.
Students don’t include such situations in their
Take-Home Portfolio because future prospects for
capital appreciation are quite unclear.
The image on the right shows the annual sales and profit
trends for one of the world’s largest manufacturers
of artificial hips, knees and related orthopaedic products.
