Image via WikipediaEASY PROFIT FOR SMALL STOCKHOLDERS
Some companies are willing to pay a premium of 10% to buy back small holdings (under 100 shares). It helps them cut the cost of servicing minor shareholders. There’s no broker’s fee for selling holdings directly to the company.
HOW INSTITUTIONAL INVESTORS THINK
High priorities for institutional investors in selecting stocks for their investment portfolios: price/earnings ratio, current and projected earnings, and management competence. Least important: product quality, the state of the US economy, and the industry group. Middle ranking: balance sheet, price per share, and long-term earnings record. Source: Investor Relations Update, 1730 M St. NW, Washington, DC 20036.
THE R&D INDICATOR
The amount of money a corporation spends on research and development is a: good guide to its earnings prospects. Generally, the higher the expenditure in relation to sales, the greater the company’s emphasis on new-product development. Benchmark: 5 % of annual sales spent on research is considered a sizable commitment to research spending. Source: Merrill Lynch Stockfinder Research Service, 165 Broadway, New York 10080.
OPTIONS AS INDICATORS
Often the first sign of a rally in a stock is increased activity in its options. Recommended: Look for newcomers on the “Most Active Options” list in The Wall Street Journal. Then, all you have to remember is …sell high…buy low...Happy climbing!
