Investing in the stock
market requires more than just examining the development
of the stock prices. Let's compare investment in the stock
market with buying a house.
When you want to buy a house, you know the price, but
knowing the price is hardly the only parameter in your
decision-making process. You want to see the house. But
looking at the house from outside is not satisfactory
either. You would also like to see inside the house,
inspect every inch of it, learn about the area around
the house, and a lot more. You will do what ever you
can to find out the weaknesses and the strengths in the
house. As an investor, you would like to get a picture
regarding the price development in the future. These
are are just a few steps in your decision-making process
when investing in a house. The fact is that you will
try to get all possible information to make your OWN
decision of whether or not you want to buy a particular
house. Therefore, it is highly unimaginable that you
just call your real state agent and tell him: "I'll
deposit money in your account, get me a good house to
move in to", or "Get me a second house to invest
Shouldn't a similar process be used for making decisions
regarding the other biggest investments of your life?
Investing in funds, companies, 401K, pension, etc.
What is StockR8?
StockR8 is a new online fundamental
analysis platform, providing institutional and
individual investors with the world's most powerful
and fastest fundamental information for over 21,000
companies around the globe. This unique service enables
you to choose companies in line with your expectations
and risk ability, in a matter of seconds.
How can StockR8
improve your investment
Having a profitable investment in stocks is mainly a
result of how you answer two vital questions:
1. What to buy/sell?
2. When to buy/sell?
While answering the second question is mainly based
on using Technical Analysis,
the first question is a matter of Fundamental
Interpretation of each company. Deciding what
to buy or sell at any particular point in time requires
a lot more investigation of the companies’ financial
status. Simply, you have to choose companies with ability
to give you the best profit.
What you actually need to do is check all the companies
in a sector, index, market, country, or the whole world.
You want to choose the best company with the
greatest probability to offer the profit you require
in harmony with the risk you want to take. To do so,
you need fundamental analysis and unlimited time (there
are over 4,000 companies listed on Nasdaq alone). If
you do not have unlimited time, then you must have a
staff of analysts helping you with analyzing stocks,
sectors and markets. Otherwise, you are left alone and
must rely on others, which may or may not be in line
with your profit and risk profile.
For the first time, we offer
you a tool to analyze and interpret
stocks from a fundamental point of view, in any
order you wish to. StockR8 offers you the possibility
to compare stocks in a branch, sector or the whole world.
In a matter of seconds you can choose a company or group
of companies, study the financial results, compare the
multiples (P/E:s) and ultimately answer
the first question WHAT TO BUY/SELL.
How does StockR8 work?
In the practical decision-making process, the main difficulty
is in finding a way of making all information available,
reduce the risk involved in investing in the stock market
and especially in working out how to capitalize on the
StockR8 gathers financial data for each company, based
on publicly available data extracted from the published
annual reports. The information is used in an economic
model. The next step is to calculate the Financial
Risk and the Earning
Strength for each company. Thereafter, StockR8
creates a rating. This rating is based on each
company's economic development and its current financial
situation. The Result will is illustrated in a graph.
The graphical position sends signals. The
rating of the companies is done on the basis of two key
criteria: Earning Strength and Financial Risk. Rating
results are displayed in a diagram similar to this.
Earning Strength describes the ability of a company
to make profit for the shareholders. The closer a company
is to the left side of the graph, the higher is the Earning
Strength. Consequently, companies on the ´right
side of the graph have less ability to create profit
for the shareholders. Therefore, these companies have
a low Earning Strength.
Financial Risk illustrates a company's ability to cope
with economic crises in respect to solidity and liquidity.
Companies with lowest Financial Risk are displayed in
the bottom of the graph. And companies displayed in the
top of the graph represent high Financial Risk.
Each company is represented with a letter code of a
maximum of 4 letters derived from the company name. The
graphics are divided into 4 squares to aid the assessment
of the positioning.
The highest rated companies are thus to be found in
the bottom left corner. These are high quality companies
capable of making good profit while applying a low level
of corporate financial risk to the investors portfolio.
The economic strength of these companies enables them
to cope with economic damages without collapsing. This
economic safety additionally enables them to repair any
damages by strengthening the organization, expanding
their product range etc. Should the share price unexpectedly
drop, the drop is not likely to make the investors lose
their total investments.
Investors requiring a high level
of security in their choice of portfolio should,
therefore, stick to companies displayed in the bottom
The top left corner consists of companies making quite
good profit but resting on a fragile economic base. This
weakens the company in possible crisis situations and
quickly brings on a need for a substantial injection
of new capital, be it either its own capital or borrowed
capital. This group of companies need to be thoroughly
examined prior to investing in them. Some of these companies
have a strong business culture and could turn out to
be a profitable investment.
The bottom right corner contains companies that have
come to a halt with regard to earnings. A safe capital
basis carries them forward through development. A continuing
lack of earnings and probable negative results thins
out the capital base. Companies in this category need
to be bought by wealthy investors with enough management
skills to turn the economic development into something
profitable. Alternatively, investors could actively participate
in general meetings and make demands to company management.
This category of companies also includes companies described
as developmental industries such as medical research.
These companies are likely to be found in the bottom
right corner. They make no profit but are equipped with
a substantial bag of money to cover development costs.
In the extreme top right corner are a number of companies
with no control of earnings or capital base. These companies
are fighting to survive, with the emphasis being on three
- The increasing difficulty of keeping customers away
from competitors who are acting on their rival company's
- Keeping up the spirit among the employees despite
difficult times and maybe even making people redundant.
- Problems with the financial partners demanding complete
insight, thorough reports and reduction of management
freedom. The extra management resources required to
comply with these demands are quite substantial.
Choosing to invest in any of the companies in this
category is quite a gamble. A survey of the last 8-10
years shows that companies in this position very rarely
survive effectively. However, some still do.
What makes StockR8 a better
The quotation analysts of today work on estimating result
development. The estimates are then summed up in an estimated
annual result per share for the next 1-3 years. On this
basis, a presumed P/E can help the decision-maker calculate
the development of the share price.