STOCK CHECK LIST
contributed by Amy Crane
the information asked for in the following questions can be answered in Value
Line, and the company's annual report, 10K or 10Q forms. After researching and
doing an SSG on a retail stock, it is a good idea to consider the following
Company and Store Growth:
sales of stores (open over one year) compare to the competition?
What is the length of time management projects that it will take for new stores to become profitable?
Can the company continue to expand by opening new stores as it has in the past if that is their plan?
How many stores has it opened in the last 10 years, and what is the percentage growth from year to year?
Is this trend up, down, or stable?
Plot the number of stores per year as shown in Value Line on the front page of your SSG.
How does this compare with the earnings, sales, and pre-tax profit margin graphs?
How does projected future growth in stores compare to your projected future sales and earnings per share growth?
Is the study company's SSG conservative enough in case growth stalls somewhat?
Merchandise, products and service (new section)
merchandise fit the buying habits of the population?
Do you "love" their products and their stores?
What do you think about its niche -- what group of buyers does the store cater to?
Do their products have staying power?
Are they building or have they built an image that the public is buying into?
Check an area that you understand, and see if they have new and trend-wise merchandise, or tired old stuff.
Do their products offer a good value for the money?
Check prices for select merchandise against the competition.
Is their brand/product instilled in your mind?
What do their stores look like and what kind of service is provided?
Are the stores updated and fresh-looking?
Do you get good service?
Is it easy to find what you are looking for?
Are the people who are shopping at the store buying merchandise?
Are the parking lots full?
How many cars are in their parking lot vs. the competition?
Does this retailer have the kind of merchandise that will help it weather a recession or high interest rate environment?
The company's competition:
the competition and how are they innovating?
Does what the competition is doing pose a threat to the study company's market niche?
Do SSGs on at least two competitors that are in a business akin to the study company?
By this I mean to compare apples to apples, i.e. don't compare Claire's Stores to Home Depot.
Compare these companies on a Stock Comparison Guide form. How does your company look?
Look at www.markeguide.com and see how your company's ratios (ie return on equity, pre-tax profit margins, inventory, etc.) Compare with it's peers. Again, make sure you are comparing apples with apples.
Inventories, cash, and receivables:
Line (Current Position) are inventories, receivables, and cash stable, growing,
or slowing over the past two years?
If inventories, receivables, and cash are growing, are they growing at about the same rate?
If they are not growing at the same rate, you should investigate significant deviations.
the comparative changes in sales, inventories and receivables year over year,
and quarter to quarter. This tip is from a BI and BITs article by Philip J.
News and Analysts:
analysts who follow the company saying about the stock?
Have they raised any possible red flags?
What news has there been in the print, television, and internet media over the past few months?
Any red flags there?
Has the company made any major changes in manufacturing, product lines, or systems?
How are these being managed?
addition, the PERT-A worksheet can tell you much about growth on a quarterly and
trailing twelve months (TTM) basis for pre-tax profits, sales, and EPS:
Is the company showing growth in pre-tax profit margins, earnings, and sales?
Is the growth in these areas at about the same rate?
Any significant slow-down in these areas should be further investigated.
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