Identifying Good Stock Investments

Identifying Good Stock Investments

If it were easy to pick a good stock, we’d all be millionaires. Unfortunately, it’s not that simple.
How do you assess which stock investments are more likely to work for you? Reading the ______is a great place to start.

Disclosure Documents

1) ______

2) ______

3) ______

4) ______

1) Annual/Quarterly Reports

One of the best sources of investor information.
Tell you whether the company is ______money and why.
Have information about the company's operations and ______.
May also contain comments from the president or chief executive officer on how the company did over the past year, as well as industry trends and events that may have affected stock performance.

2) The Company Prospectus

Published when a company issues ______.
Has information you find in an annual report, including audited financial statements and a summary of the major ______affecting the company.

3) Press Releases

Issued when a company decides a change is important enough to be shared with the ______.
Investors should pay close attention to press releases from a company.

4) Company websites/Electronic Communications

Provide ______as well as annual reports, quarterly statements, and past press releases.
May include ______and ______by executives and analysts' reports.
May offer conference calls with analysts as a webcast.
Some telephone conference calls are opened up to the public and any investor can listen in.

Wrong/Misleading Information

The prospectus will tell you your ______to stop a purchase or to sue for damages. These rights are limited. That’s why it’s so important to do the research and choose your investments carefully.
You won’t find a lot of history if the company is fairly ______.
Also, most ______held companies are not required to disclose information about their business activities. For information on these companies, contact the firm directly and ask for the information you need.

SEDAR

You’ll find many documents at the ______(SEDAR). SEDAR is the official website where public companies file documents required by securities laws in Canada. Investors can search the SEDAR site by date, document type, company name, or industry sector.

Information is Key!

Reading disclosure documents can help you separate companies that have good ______from those that don’t.

What can I learn from disclosure documents?

Does this company have a good track record?
You’ll find out if it’s making or losing money and whether it has been growing. Companies that have a good ______of growth over many years may be likely to increase their share price in the future in a steady way.
Does this company have the potential to grow?
The disclosure documents tell you what business it’s in, who it ______with, and how it plans to grow.
What things can affect the future of this company?
A recent prospectus will tell you about the possible ______risks. The section on risk factors warns you about anything that could affect the company’s ______.

Warning Signs

Is the company trying something ______and untested? If yes, who are its competitors and how successful are they?
If other players are more ______, this company may have a tough time breaking into the market.
Are there signs the company will need ______soon? If so, what are its plans for raising funds?
If the company borrows money a lot,it may need more money again in the future.
Do the company’s directors and other officers have a solid track record of success? How are they ______? Do their salaries seem reasonable compared to how the company is doing?
How much of the company do the directors and officers own? Have any directors ever been in trouble with regulators?

Remember!