Stock "Buy" Criteria

In order to make informed decisions when selecting stocks to buy, you need to develop a set of criteria for screening stocks and determining if they are "buy" candidates for your club. Using the partnership philosophy, you should determine the kind of stocks you are looking to buy. Develop criteria that "flags" the stocks that coincide with you club philosophy. Once your criteria are set, finding favorable stocks will be much easier.

To select the best stocks for your club, require that a stock meet at least 50% of your buy criteria; if the stock meets less than 50% of the criteria, it will probably not perform as expected. There are some exceptions where a stock is so strong in some criteria categories that it may still be a wise purchase! Remember - this is not an exact science!! Speculation and analysis allow for "informed decisions", not guarantees!!!

As your club changes, make sure you adjust your criteria to mirror your philosophy and your expectations. I guarantee that your club will change directions during the first year of operation, so be flexible, learn from your mistakes and change your criteria accordingly!!


SSIC "Buy" Criteria

1. Price/Earnings ratio is below the average P/E ratio for the last three years.
2. P/E ratio is 30 or below.
3. Current Earnings Per Share (EPS) is 25% greater than EPS for the same quarter in the previous year.
4. Annual EPS has increased each year over the past three years.
5. Beta (stock volatility) falls between .8 and 1.2.
6. Zoning is in the "buy" range (lower 1/3 of projected price range).
7. Total debt is no more than 1/3 of total assets.
8. Projected growth and earnings are in double digits.
9. Competent and experienced management.
10. Company has received positive press lately.
11. Company diversifies its services and products and sells to many different customers.
12. Company shows plans for expansion and an interest in international markets.

Please email ssic@writeme.com

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