Formulas for stocks.?

Question

I am writing a program that tells you which stocks to buy. It uses formulas like PE ratio to tell you how good the stock is. I need more formulas to add to my program.

Please give me some formulas and numbers that would be ideal to see.

I'm only 13, give me a break

Answer 1

I'm a big fan of EV/EBITA valuations. Works very similar to PE, but is more accurate.

EBITA is the Earnings Before Interest, Tax, and Amortitization. This is the number represents the cold cash that's coming in and out of the business without items that are totally out of the company's control such as Interest and Taxes which change with interest rates of what the government is doing. And without the bullshit mumber of Amotitization, which is what the company feels has lost through depreciation of assets (which is an abitrary number).

EV is Enterprise Value. What I like about EV is unlike Price valueation, EV takes debt into account and is representative of if you bought the company and took it private. The Enterprise Value is the company's Market Cap (the P in PE) plus the company's Debt, minus the company's Cash in the balance sheet. How this works is, the Market Cap is how much you would pay if you bought the whole company with cash. The company's debt is the debt you'll be inheriting from the company. And the company's Cash on hand is basically the cash back you'll be getting if you bought the company. It makes perfect sense, since if you bought a company, you'll be getting all it's cash and all it's liabilities along with it.

As for actual numbers, on average I look for below 12. But for non-fast growth companies, I try to buy when it's below 8.

Answer 2

Comparative numbers for profits, revenues, margins, cash, debt load, cash flow between a target stock and its industry peers. A high profit, with low debt, good book value, and lots of cash and cash moving with increasing revenue and a good margin, that an in an advantageous position in relation to its peers--this is the kind of thing that always grabs my attention. Maybe when you make your valuations you then sort them by common business and see what bubbles up.

Answer 3

If making big money from the stock markets comes from a set of formulas, then shouldn't all the Mathematics and Economics Professors of all universities be multi-billionaires by now?

http://www.mastersoequity.com

http://www.optiontradingpedia.com

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Answer 4

Follow the money and get out before the big guys do, that's the only formula you need to now.

Answer 5

Look, there are many highly paid people on Wall Street (people with degrees from Stanford, Harvard, and MIT) already doing this work. They are called "quants." If you really have the skill to do this, you should have no problem finding your own numbers.

Answer 6

Try moving averages.