Glossary
Market Capitalization (Market Cap) - The total value of a company's stock. If an investor bought the entire company at market price, what would he/she pay?
Price to Earnings (PE) - Worthwhile companies have a history of profitable earnings and a reasonable market price compared to these earnings.
Shareholder Equity - The total company Assets minus Liabilities. The "book value" of a company.
Profit Margins - Revenue minus expenses. A healthy profit margin is a healthy margin of safety.
Growth Potential - Does this stock have room to grow? Is this a booming industry or a dieing breed?
Manager Integrity - Is the company honest? Are they mired in damaging litigation? Remember, whe you see one cockroach in your kitchen, over the next few days you will likely meet his family.
Earnings Forecasts - The consesus earnings projected by industry experts. How are the company's short term prospects?
Debt (Liabilities) - Some analysts say a company with very little debt is improperly leveraging its assets. Others believe that debt is a chain around the company's ankles.
Technical Analysis - The short term movement forecasts of a stock using chart analysis. A great company is usually a winner in the long run, but in the short term is the market loving or hating this stock?
Product Diversity - Does the company offer a diverse range of good's and services?
Customer Diversity - Does the company only do business with a few major clients? Does the company reach span the global market?
Cashflow - Does the company have enough cash to cover it's short term liabilities? Is the company hemorrhaging money?
Earnings Per Share (EPS) - A company's total earnings divided by number of shares outstanding. The net income per share.