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Fire Your Stock Analyst!: Analyzing Stocks on Your Own by Harry Domash

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Value Stock Analysis Scorecard

I’ll use ATI Technologies, the same company I used to illustrate the value analysis process, to explain how to score a value candidate.

Step 1. Analysts’ Ratings and Forecasts

The best value prospects are stocks that market analysts don’t like much. The Sentiment Index reflects analysts’ buy/sell ratings and the scorecard rewards low sentiment scores. It penalizes firms with high earnings growth forecasts and/or positive earnings growth forecast trends. ATI scored one Sentiment Index point and no earnings growth penalty points.

Step 2. Valuation

Value candidate’s share prices should reflect low growth expectations. The score rewards candidates with implied average annual earnings growth below five percent and ...

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