Why Warren Buffett Is Buying: Methodology
How we chose the 10 companies that offer some hope for the economy
Here are the main criteria Zacks Investment Research used to identify 10 undervalued companies with sound operations and good prospects:
[ ] Market capitalization of $1 billion or more
[ ] Stock price greater than $5
[ ] Average 20-day trading volume greater than 100,000 shares[ ] Projected 2008 growth rate greater than the average for the S&P 500 stock index (compared with last year)
[ ] Projected 2008 growth rate this year greater than zero (compared with last year)
[ ] Projected 2008 growth rate greater than the company's five-year historical growth rate
[ ] 12-month price-to-earnings ratio less than the average for the S&P 500
[ ] P-E ratio / five-year high is less than 0.5. (In other words, the current P-E ratio is at least 50 percent lower than its five-year-high P-E ratio)
[ ] P-E ratio / five-year average is less than 0.5. (In other words, the current P-E ratio is at least 50 percent lower than its five-year average P-E ratio)
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Formula for stock evaluation
[(total equity gain % for TTM)/ (net profit margin % for TTM)] X [estimated 2009 vs. 2008 earnings per share gain as a %]= My "Dynamic" stock indicator
For (LFL) it is = 21.25
For (ACV) it is = 16.88
For (PENN) it is = 15.84
Out of these 3 stocks I would pick (LFL) to buy now. What does your analysis method reveal?
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