Cyclical and non cyclical is
the correlation of stocks with the economic conditions of the
market and general fluctuations of the economy. Cyclical stocks
are highly correlated with the market conditions. For example,
if the economy is weak and consumers are not spending money, Cyclical
stocks will experience a decline in prices. This is because with
less disposable income, consumers can afford less luxuries and
material goods. This results in lower sales and net income results
for Cyclical stock companies. (View
Full Article)
|
If you buy a stock at a P/E ratio of
15, this means it will take you 15 years of earnings derived from
that stock in order to cover up your original investment. In other
words, you'll get a "payback in 15 years." Consider
a corp that earned $15 million last year and had earnings per
share of $15 with 1.5 million shares outstanding. If the current
trading price of the stock is $150, this means the firm's P/E
Ratio is = $150 / $15 = $10. This can also mean the investors
are willing to pay $10 for every $1 of earnings derived from that
stock
|
One of the ways of determining
if a particular stock is strong is by looking at that company's
Balance Sheet. The balance sheet will illustrate what the company
owns (current & long term assets), what it owes (short &
long term debt) and its position of financial liquidity. You wouldn't
want to invest in a company that has trouble paying its short
term bills now would you? In this article, we will look at 3 of
the common accounting ratios that help determine the financial
position of a company. (View
Full Article)
|
Stock Beta is a calculation
or measurement of volatility or risk of a stock trading on the
stock market. It is the fluctuation in stock prices and the market
in general. Some stocks have greater risk than others, and thus
carry higher Stock Betas. Stock betas are measured using regression
analysis.
- A Beta of 1 shows the
stock is moving in proportion with the market in general.
- A Beta Greater than 1 shows the stock
is more volatile than the market in general (examples include
many high-tech stocks).
- A Beta Less than 1 shows the stock is
less volatile than the market in general (examples include many
utility company stocks). (View
Full Article)
|
