Flashcards in Investing in Stocks Deck (47):

1

## 4 Ms to investing in company stock

###
meaningful to you

moat (you must iD the moat)

management

margin of safety

2

## meaningful

###
it has meaning to you and you would own it

as if it your life depended on it

3

## 10:10 rule

###
u wouldn't own it for 10 minutes unless u

would own it for 10 years

4

## 5 moats

###
brand

trade secret

exclusive control

ubiquitous in everything you do

lowest prices

5

## 5 big # companies must have

###
ROIC or ROC growth

Sales growth

EPS growth

Equity growth

cash growth

6

##
the 5 big # must meet _____ in all 5 # for

the past _____, ______, ______, and _____.

###
10% growth

10 yr

5 yr

3 yr

1yr

7

## equity is aka as _____

### book value per share (bvps)

8

## rule # 1

### never lose money

9

## 3 keys to investing

###
determine worth

buy at 50% off

sell when it's overpriced

10

## where do you find equity and debt #?

### balance sheet

11

## where do you find sales and EPS #?

### income statement

12

## where do you find cash #?

### cash flow statement

13

## ROIC

### return of investment capital

14

## BVPS

### book value per share

15

## free cash is the _____ minus the _____.

###
cash out

cash in

16

## rule of 72

###
take the # 72 and divide it by the interest

rate and you will get the # years it will take

to double your money

17

## # years to double your money = _____

### 72/interest rate

18

## interest rate =

### 72/# years to double money

19

##
growth rate approximations are calculated

by taking the ______ divided by ______

which will give you the avg. years it takes

to _____. the growth rate is then

approximated using the _____.

###
# of times that it doubles

the total years

double

rule of 72

20

##
the most important growth # (of the 4

that we have to calculate) is _____. this

is because the "sticker price" is the _____

and it will most closely follow the _____.

###
equity growth

value of the company

equity growth

21

## priority of growth rates

###
#1 equity growth

#2 EPS growth

#3 sales growth

#4 free cash growth

22

## the single most important # is _____

### ROIC growth

23

## ROIC =

###
(net operating profit after tax)

divided by

(equity - debt)

24

## MOS is created by buying the stock _____.

### at 50% less than the sticker price

25

##
the sticker price is the _____ of the stock

that the market _____ be selling the stock.

###
fair value or retail price

should

26

## to calculate the sticker price u need 4 #

###
current EPS

estimated EPS growth rate

estimated future PE

minimum acceptable rate of return

27

##
the sticker price is calculated by knowing

the amount of money a business is going

to make in the ______.

### future

28

## future market price =

### (future PE)(future EPS)

29

## ttm EPS

### trailing 12 month EPS

30

##
most important # for determining future

EPS is _____.

### the equity growth rate

31

##
growing equity comes from _____ and this

is what makes a business valuable.

### surplus cash

32

## sticker price determination has 3 steps

###
1) grow current EPS using estimated EPS

growth rate for 10 yr.

2) multiply future EPS by future PE

3) shrink future market price by the

minimum acceptable rate of return per year

33

##
if the market thinks a company is going to

grow really fast then it will give it _____.

### a high PE

34

## quick rule of thumb for future PE is _____

###
double the estimated EPS growth rate. this

is called the default PE.

35

## PE =

### Price/EPS

36

## PE is how much we are willing to pay ____.

### for a dollar's worth of company earnings

37

## default PE =

### double the estimated EPS growth rate

38

## pick the lower PE from the 2 following

### historical PE or default PE

39

##
pick the lower estimated EPS growth rate

from the 2 following

###
analysts estimated EPS growth rate

historical estimated EPS growth rate

40

## minimum rate of return is at least _____.

### 15%

41

##
use rule of 72 to determine _____. take 72

and divide it by estimated EPS growth rate

to determine _____. then determine how

many times it will double in _____. use

_____ and calculate future EPS

###
future EPS

# of years to double

10 years

current EPS

42

##
because we use ____ as our minimum

rate of return and we use the rule of 72,

the sticker price will double _____ in 10

year; therefore our sticker price will always

be _____ of the future market price.

###
15%

twice

1/4

43

## 2 times to sell

###
when the company is no longer wonderful

market price > sticker price

44

## market cap

### price/share times all the shares

45

## 3 tools to determine when to buy/sell

###
MACD

Stochastics

Moving Averages

46

##
use past BVPS to determine the years it

took to double, then find the avg. years it

took to double and divide 72 by it. this =

### equity growth rate

47