Basic steps to follow before buying a stock

Best Small Cap Companies To Watch In Right Now

Investors need to make decisions based on certain factual information. Subsequently, they make future assumptions based on those facts. As such, knowing how an industry and a company functions is very important. In addition, it is equally important for one to gain such information from proper and reliable sources.

Hence, we present herewith a basic idea of where you can go about looking for information on companies you wish to invest in.

Sources of information on companies

Offer documents: For a novice investor, it is always recommended that he understands a sector and its dynamics before jumping into understanding the workings of a particular company. One of the best sources for understanding a particular sector or industry is the offer document of the company (or a peer group company), if one can get hold of one. Every company which gets listed on the stock market needs to file an offer document with the Securities & Exchange Board of India (SEBI). Apart from facts and figures about the company and its promoters, this document also contains information relating to the working of the industry (the company is involved in).
One may refer to SEBI's website to see the offer documents that have been issued over the past few years.

Annual reports: In case of a company for which you cannot get hold of the offer document given that the company has been listed on the stock exchanges for long, the annual report comes in handy. The director's report and the management discussion and analysis (MD&A) sections of an annual report provide good information related to the company and industry. However, as compared to the offer document, this information is usually related to the past year and the management's views on the outlook for the next year. Having said this, it would be advisable for one not to blindly take the management's views into consideration as more often than not; it tends to paint a rosy picture.

BSE/NSE announcements and company press releases: We at Equitymaster have always believed in attaining information straight from a company rather than from a third party. Even if an investor gets some 'inside information' on a particular company, it is difficult to determine how factual and accurate it is. Apart from annual reports (which are published on an annual basis), it is the official company documents such as press releases, announcements and presentations which are released in regular intervals. The source for such information is the BSE or NSE websites (in their respective corporate announcement sections) and the company's website.

Business dailies and other media: Newspapers and news channel are a great medium for gaining updates on companies. Interviews with managements provide good information on the views, plans and strategies of companies. However, information divulged from sources who do not wish to be named can be dicey. Reporters and journalists may get such news printed as they try to snoop around and find out stories relating to a particular company. But there have been a handful of cases wherein companies (on whom the news has been reported) have made announcements stating that the information is speculative or not true. As such, it would only be possible for an investor to judge the piece of news / information provided he is well acquainted with the company and its working.

Equitymaster.com

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Find out: Differences between financial planners and agents

We all work hard to earn money, but when it comes to plan and grow your hard earned money; whom do you choose - Agent or Financial Planner? Even though financial literacy has been widely spread through electronic, print and television media, very few people are actually aware of existence of Financial Planners in the market.

Hence only few people must be approaching a Financial Planner for advice; and agents must be playing a major part in your financial lives for making investment decisions.

Financial Planner v/s Agent/Distributor

Financial Planner charges a fee which is in the range of Rs.15,000 Rs.25,000 (average) for preparing a goal based financial plan for your financial future and gives unbiased advice for a certain period (usually 1 year, later on the service has to be renewed).

While an agent / distributor does not charge any fee i.e. it is absolutely free. He is paid commission by the company whose products which he sells.

Difference in Investment and Insurance Advice

Mutual Fund Investment

Financial Planner will always give advice in your interest i.e. schemes which are suitable with respect to your goal, risk appetite and time horizon, since he has charged a fee from you for giving advice.

After the introduction of direct plans in Mutual Fund from January 1, 2013, most of the planners advice direct plans, since the expense ratio is lower under direct plans, and there is no intermediary involved.

This can save upto 0.40 percent - 0.60 percent per annum on your total investment. While the Mutual Fund Distributor will not even inform you that there are such kinds of direct plans available in the market.

They will sell (so called "advice") you the schemes, which will be beneficial for him, as these will pay him higher commission. Agents generally are not concerned with your financial goals.

Life Insurance

Financial Planners usually calculate your insurance need based on your financial needs (goals) and existing investments (called 'need based insurance'). Planner will review your existing insurance as well, and advice whether it should be continued or surrendered.

Planner will always recommend buying 'online term plan', since they are the cheapest and does not involve any intermediary. So you save a lot on your insurance premium by buying right policy and adequate cover at minimal amount.

If you already have sufficient assets and existing insurance incase of an uncertainty, which will be sufficient for your dependents then planner will advise not to buy additional life insurance. Also if you do not have any dependants, the planner will not recommend you to buy life insurance.

On the other hand, insurance agent will never consider/calculate your insurance need, never recommend you buying term insurance since the premiums are low and thus the commission he will earn on your policy.

Agent will sell traditional plans with high premiums and low insurance cover, which will earn him approximately 20 percent - 30 percent of regular annual premium. Also the agent will not bother whether you need insurance or review your existing insurance policies.

Health Insurance

Financial Planner will recommend adequate health insurance for you and your family with a mix of individual / floater health insurance plan and a top-up plan. Top-up plan is a plan, which will reimburse hospitalization expense over and above a specified amount (called deductible).

Thus the premium is low for top-up policies. So, you can get high health insurance cover at a lower premium. Agents generally do not promote top-up plans since the premiums are low and thus the commission they earn on it is low. Agent may advice you buy different policy or increase the sum assured instead of advising top-up plan.

Gold Investment

Financial Planner will recommend you to invest in gold via ETF (Exchange Traded Fund). The cost of investing in ETF is low compared to Gold Funds of mutual fund.

Expense ratio of Gold ETF is around 1 percent to 1.50 percent, whereas Gold Fund, which invests in Gold ETFs, bears the cost of Gold ETF as well as expense of Gold Fund of around 0.50 percent to 0.70 percent.

So the Gold Funds bear double cost and are thus expensive and this reduces the overall return of the fund. Mutual Fund distributors cannot sell ETFs, so they never recommend them. 

This way you can see the quality of advice that you can get from a Financial Planner compared to any agent or distributor. The advice by a planner is totally unbiased and thoroughly researched and is in your interest.

There is no conflict of interest in the advice given by the Financial Planner. Also, the planner will present you a road map to your financial future. So, now it is time to find the right Financial Planner to plan your finances and say good bye to your agent.

Apnapaisa in India's Online marketplace for loans , investments & financial planning .

Xilinx Remains Neutral - Analyst Blog

On Jul 5, 2013, we retained our Neutral recommendation on semiconductor chip-maker, Xilinx Inc. (XLNX). On Apr 24, Xilinx posted mixed first quarter 2013 results. Revenues declined on a year-over-year basis and missed the Zacks Consensus Estimate. But the quarter's adjusted earnings of 47 cents were better than the year-ago level and also ahead of the Zacks Consensus Estimate.

Xilinx delivered a positive earnings surprise in the last quarter, with an average beat of 5.95% for the trailing four quarters. Currently, Xilinx has a Zacks Rank #3 (Hold).

Why a Neutral Stance?

Xilinx currently dominates the Programmable Logic Device (PLD) market with its 28 nanometer (nm) field programmable gate array (FPGA) products. The company has introduced a broad array of 28nm FPGA chips during fiscal 2013. The new product launches led Xilinx to generate better-than-expected revenues from the FPGA portfolio in the last quarter.

Management expects 28-nm FPGA revenues to grow 150.0% year over year in fiscal 2014 based on continued ASIC and ASSP displacement and higher usage of FPGAs in next generation wireline & wireless networks and data centers. LTE deployments in the communications market will drive FPGA demand leading to continued momentum for Xilinx.

Xilinx' leadership could get affected while transitioning to lower nodes. Though archrival Altera Corp. remained an underdog in the 28-nm transition, the trend could reverse in the case of 20-nm or 14-nm. Both the companies are planning to launch their 20-nm products shortly.

Notably, Altera has started working on developing 14-nm FPGAs leveraging Intel Corp.'s tri-gate transistor technology. In response, Xilinx also announced its 16-nm plans in association with its foundry partner Taiwan Semiconductor Company.

Estimate Revisions

Over the last 30 days, estimates for 2013 and 2014 remained unchanged. Hence, the Zacks Consensus Estimate for 2013 and 2014 also remains unchanged at $2.00 and $2.30 per shar! e, respectively.

The lack of estimate revisions indicates that there are no drivers to move the stock in either direction.

Other Stocks to Consider

Other stocks in the technology sector that are currently performing well include Hewlett-Packard Co. (HPQ), NetApp Inc. (NTAP) and Micron Technology Inc. (MU). All these companies carry a Zacks Rank #2 (Buy).

V.F. Corp. Soars to a New High - Analyst Blog

Shares of V.F. Corporation (VFC) touched a new 52-week high of $200.55 on Friday, Jul 12, 2013 and eventually closed trade at $199.56. The stock has gained momentum since the company announced its 5-year initiatives and strategies to boost shareholder returns. This global apparel retailer has amassed a year-to-date return of 34.1%.

Average volume of shares traded over the last 3 months was approximately 512K. Moreover, the company currently trades at a forward P/E of 18.4x, a 1.9% premium to the peer group average of 18.05x. The last traded price is 0.6% above the Zacks Consensus average analyst price target of $198.43. Additionally, the company's long-term estimated EPS growth rate is 11.7%.

Investors became more optimistic on this Zacks Rank #3 (Hold) stock after the company outlined its key financial targets through 2017 at an investor meet held on Jun 11. Its announced goals are aimed at driving strong cash flow, and consequently funding acquisitions, dividends and share repurchases.

As part of its key financial targets, V.F. Corp. expects to increase revenues to $17.3 billion by 2017, recording a 5-year compounded annual growth rate (CAGR) of 10% – including 8% organic growth and 2% growth from acquisitions. Earnings per share through 2017 are projected to reach $18.00, reflecting a 5-year CAGR of 13%.

The company now expects gross margin to jump 300 basis points (bps) to 49.5% in 2017 from 46.5% in 2012. Operating margin for 2017 is likely to increase to 16%, rising 250 bps from 13.5% in 2012.

The growth in the company's margins will likely drive annual cash flow from operations to $2.4 billion by 2017, with cumulative cash flow generation of $9.5 billion from 2013 to 2017. Based on such strong cash flow projections, the company expects a dividend payout rate of 40%, annual total shareholder return of more than 15% and return on invested capital of 20% by 2017.

The company's history of positive earnings surprises has made investors upbeat on t! he stock. We observe that V.F. Corp. has beaten the Zacks Consensus Estimate in the past 10 quarters by an average of 7.5%.

V.F. Corp.'s diversified brand portfolio and its brand management – with focus on developing its brands further – position the company more advantageously than its peers. Given the strength of many of its brands and the opportunities in distribution, we believe that V.F. Corp. is well poised for long-term growth.

Apart from V.F. Corp., other retail stocks such as The Gap, Inc. (GPS), Big 5 Sporting Goods Corp. (BGFV) and Conns Inc. (CONN) achieved new 52-week highs of $45.37, $24.00 and $58.40, respectively, on Jul 12, 2013.

Top 5 China Companies To Buy For 2014

Yesterday, Tesla (TSLA) gained 1.8% after Bloomberg honed in on orders for the cars in Hong Kong. Making inroads into mainland China may be more difficult, however.

REUTERS

Reuters has reports on Tesla’s may not be able to use its name in China:

The maker of the best-selling U.S. electric car, the premium Model S sedan with a price tag of $70,000, had originally hoped to launch a flagship showroom in Beijing at the start of the year, according to three sources, but has had to put that idea on hold due in part to the trademark issue.

As a result, the 10-year-old company’s first shop-front in�China, at the Parkview Green Fangcaodi mall in the capital, sits boarded up. While there is no Tesla sign, the shop is adorned with billboards of the Model S, which was launched in the United States last year.

Top 5 China Companies To Buy For 2014: China Green Agriculture Inc.(CGA)

China Green Agriculture, Inc., through its subsidiaries, engages in the research, development, production, and sale of various types of fertilizers and agricultural products in the People?s Republic of China. Its fertilizer products include humic acid-based compound fertilizers, compound fertilizers, blended fertilizers, organic compound fertilizers, slow-release fertilizers, water-soluble fertilizers, and mixed organic-inorganic compound fertilizers. The company markets its fertilizer products to private wholesalers and retailers of agricultural farm products in 22 provinces, 4 autonomous regions, and 3 central government-controlled municipalities. It also engages in the development, production, and distribution of agricultural products, such as fruits, vegetables, flowers, and colored seedlings. The company sells its decorative flowers to flower shops, luxury hotels, and government agencies; fruits and vegetables to supermarkets and upscale restaurants; and seedlings to city planning departments in Shaanxi and its neighboring provinces. China Green Agriculture, Inc. is based in Xian, the People?s Republic of China.

Advisors' Opinion:

• [By Louis Navellier]

  You might say that China Green Agriculture (CGA) is the salt of the earth when it comes to China stocks. Well, maybe not salt in the literal sense, just more in the metaphoric sense.

  Literally, China Green Agriculture is a maker of fertilizer. The company’s humic acid organic liquid compound fertilizers help enrich the soil needed to grow the food that sustains China’s ginormous population. The company produces approximately 119 fertilizer products, and it markets those products to private wholesalers and retailers of agricultural farm products.

  And talk about strong price momentum — CGA shares are up 360% over the past 12 months!

  I rate CGA an A, making it a strong buy.

Top 5 China Companies To Buy For 2014: U S Concrete Inc.(USCR)

U.S. Concrete, Inc. engages in the production and sale of ready-mixed concrete, precast concrete products, and concrete-related products for use in commercial, residential, and public works construction projects in the United States. It operates in two segments, Ready-Mixed Concrete and Concrete-Related Products, and Precast Concrete Products. The Ready-Mixed Concrete and Concrete-Related Products segment involves in the formulation, preparation, and delivery of ready-mixed concrete to customers? job sites; and the provision of various services that include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs. This segment also engages in the mining and sale of aggregates, such as crushed stone aggregates, sand, and gravel; and the resale of building materials, including rebars, concrete blocks, wire mesh, color additives, curing compounds, grouts, wooden forms, concrete masonry, and tools. Th e Precast Concrete Products segment produces a range of precast concrete products for use in various architectural applications, including free-standing walls used for landscaping; soundproofing and security walls; panels used to clad a building facade; and storm water drainages. This segment also offers various finished products consisting of utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles, and custom-designed architectural products. The company serves general contractors, concrete sub-contractors, design engineers, architects, governmental agencies, property owners and developers, and home builders principally in Texas, California, New Jersey, and New York. As of March 7, 2011, it had 102 fixed and 11 portable ready-mixed concrete plants, 7 precast concrete plants, and 7 aggregates facilities. U.S. Concrete, Inc. was founded in 1948 and is based in Houston, Texas.

Advisors' Opinion:

• [By cnAnalyst]

  US Concrete Inc (NASDAQ:USCR) is the 9th best-performing stock last month in this segment of the market. It was up 65.22% for the past month. Its price percentage change was -79.12% year-to-date.

Top 10 Blue Chip Stocks To Buy For 2014: DAQQ New Energy Corp.(DQ)

Daqo New Energy Corp., together with its subsidiaries, manufactures and sells polysilicon in China. The company sells its polysilicon to photovoltaic product manufacturers for use in the processing of ingots, wafers, cells and modules for solar power solutions. It also produces and sells mono-crystalline and multi-crystalline modules to photovoltaic system integrators and distributors in China and internationally under its Daqo brand. The company was formerly known as Mega Stand International Limited and changed its name to Daqo New Energy Corp. in August 2009. Daqo New Energy Corp. was founded in 2006 and is headquartered Wanzhou, the People?s Republic of China.

Advisors' Opinion:

• [By Kevin1977]

  DAQQ New Energy Corp.(NYSE: DQ) closing price in the stock market Tuesday, Jan. 3, was $1.84. DQ is trading -4.75% below its 50 day moving average and -59.53% below its 200 day moving average. DQ is -87.71% below its 52-week high of $14.97 and 30.50% above its 52-week low of $1.41. DQ‘s PE ratio is 0.60 and its market cap is $64.66M .

  DAQQ New Energy Corp. manufactures and sells polysilicon in China together with its subsidiaries. DQ sells its polysilicon to photovoltaic product manufacturers for use in the processing of ingots, wafers, cells and modules for solar power solutions.

Top 5 China Companies To Buy For 2014: KongZhong Corporation(KONG)

KongZhong Corporation, together with its subsidiaries, provides wireless interactive entertainment, media, and community services to mobile phone users in the People's Republic of China. It also involves in the development, distribution, and marketing of consumer wireless value-added services, including wireless application protocol, multimedia messaging services, short messaging services, interactive voice response services, and color ring back tones. In addition, it offers interactive entertainment services, such as mobile games, pictures, karaoke, electronic books, mobile phone personalization features, entertainment news, chat, and message boards; and through Kong.net offer news, community services, games, and other interactive media and entertainment services; and sells advertising space in the form of text-link, banner, and button advertisements. Further, the company develops and publishes mobile games, including downloadable mobile games and online mobile games cons isting of action, role-playing, and leisure games. As of December 31, 2009, it had a library of approximately 300 internally developed mobile games. Additionally, it develops online games; and provides consulting and technology services, as well as media and net book services. The company was formerly known as Communication Over The Air Inc. and changed its name to KongZhong Corporation in March 2004. KongZhong Corporation was founded in 2002 and is headquartered in Beijing, the People?s Republic of China

Advisors' Opinion:

• [By Wyatt Research Staff]

  As a Chinese ADR, KONG is the leading provider of 2.5G wireless interactive entertainment, media and community services in terms of revenue to customers of company China Mobile. Institutions snatched up shares at an alarming rate with an increase of 26.7% in institutional ownership over the past three months.

  A consensus of analysts expect earnings to increase by 16.9% in 2011 and 19.6% in 2012. Company earnings are estimated to increase by 62.1% this year.

Top 5 China Companies To Buy For 2014: eLong Inc.(LONG)

eLong, Inc. operates as an online travel service provider in the People?s Republic of China. The company provides its customers with travel information and the ability to book rooms, air tickets, vacation packages, and other travel related services utilizing call center and Web-based distribution technologies. It facilitates the customers to book rooms in approximately 10,000 hotels in 450 cities across China, and fulfills air ticket reservations in approximately 80 cities across China. In addition, the company offers the ability to book rooms at approximately 100,000 hotels outside of China; and provides the customers informative content relevant to hotel and air travel decisions, including tourist and event site destination information, hotel facility information, and photos. eLong markets its services through online marketing, traditional media advertising, co-marketing with established brands of other companies, and direct marketing. The company was founded in 1999 and is headquartered in Beijing, the People?s Republic of China. eLong, Inc. operates as a subsidiary of Expedia Asia Pacific Limited.

Advisors' Opinion:

• [By cnAnalyst]

  eLong, Inc. (ADR) (NASDAQ:LONG) is the 10th best-performing stock last month in this segment of the market. It was up 62.09% for the past month. Its price percentage change was 17.47% year-to-date.

Autodesk A Little Undervalued, But Uncertainty Is Rising

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It's interesting to see which excuses the Street willingly accepts when a company is struggling with guidance. In the case of Autodesk (Nasdaq:ADSK), the Street isn't too bothered by another round of lower guidance and ongoing economic uncertainties. Instead, investors seem excited about the potential of a more pronounced transition to a SaaS model. Although I think the Street may be a little too optimistic on that point, the shares do look a little undervalued and remain a volatile software play leveraged to improving economic activity.

Fiscal Second Quarter Basically On Target
It sounds like there's still quite a bit of noise and uncertainty in Autodesk's core CAD/CAM end markets, but the company still delivered an in-line quarter.

Revenue fell 1% from last year, and a little more than that on a sequential basis, as an 8% drop in license revenue was offset up a 9% increase in maintenance revenue. Both Architecture, Engineering, and Construction (AEC) and Manufacturing were up annually and sequentially, while Platform/Emerging declined over both periods.

Margins weren't great, but analysts weren't expecting that they would be. Gross margin (adjusted) declined more than a point, while operating income fell 5% and operating margin fell by one point.

SEE: 3 Secrets Of Successful Companies

Emerging Markets Have Yet To Emerge
There's still quite a bit of uncertainty and turbulence in Autodesk's core end-markets, but that's not exactly news. If you look at a graph of past trends across the AEC, Manufacturing, and Platform businesses, it looks something like a squid's tentacles. In any case, the recovery in non-residential construction is still far from confirmed, and it often takes one or two quarters for improvements in regional/national PMIs to show up in better licensing performance.

Nevertheless, management issued rather weak guidance for the fiscal third quarter – offering a new midpoint that was about 6% below the prior average estimate. Emerging economies remain particularly challenging for Autodesk at this time, a point made previously by PTC (Nasdaq:PMTC) particularly with respect to Chinese manufacturing. It's also worth noting that Dassault's (Nasdaq:DASTY) quarter was not exactly a blockbuster either, but it has done no real harm to the stock.

Will A SaaS Transition Really Move The Needle?
In a vacuum, I suspect that Autodesk's guidance would have been a setback for the stock. Management offset that with news that it intends to accelerate the company's transition to a more SaaS-oriented model. With that, it sounds like investors have jumped on the "It'll be like Adobe (Nasdaq:ADBE) all over again" train.

I'm not sure that's the right move right now. Autodesk already has a large percentage of its customers (around 70%) on a subscription plan, while Adobe's business was based far more on discrete purchases. On the other hand, Aspen Technology (Nasdaq:AZPN) and Cadence Design (Nasdaq:CDNS) had beneficial transitions that could point to longer-term potential for Autodesk. All of that said, I'd be careful about making the wholesale assumption that this is a completely positive move – nobody has shown yet that a SaaS model can be leveraged to the same sort of profitability as more traditional software models and lucrative maintenance revenue has long been a key part of the Autodesk story.

The Bottom Line
Just looking at Dassault and PTC, it would seem that Autodesk shares should be a little stronger than they are. Likewise, a discounted cash flow analysis using a growth assumption of about 6% suggests these shares are at least 10% undervalued. Add to that the possibility that global economic activity could improve more than analysts expect, and there's a bullish case to make. On the other hand, I would worry a bit about inflated expectations for the SaaS transition and the shares aren't exactly dirt cheap.

Disclosure – At the time of writing, the author did not own shares of any company mentioned in this article.

Middle-Income Boomers More Likely to Plan for Death Than LTC

Almost two-thirds of middle-income boomers have no plan to address long-term care they might need in retirement, according to a survey released Tuesday by Bankers Life and Casualty Company Center for a Secure Retirement. Only 20% have even a rough plan for care in retirement.

Bankers Life surveyed nearly 1,300 Americans between 49 and 67 with incomes between $25,000 and $75,000.

“Retirement care is an important and often overlooked component of planning for retirement,” Chris Campbell, senior vice president of marketing and communications at Bankers Life and Casualty, said in a statement. “Boomers today need to consider moving beyond simply creating a retirement financial plan to also creating a retirement care plan that reflects their own needs, preferences and financial circumstances.” 

In a morbid turn, the study found respondents are almost five times as likely to have a plan for what they want their family to do when they die. Over 80% have taken at least one step to prepare for their death like sharing preferences on funeral arrangements or burial location, buying life insurance or creating a will. Just 17% of respondents have taken even one step to prepare for care they may need later in life.

Reluctance to speak with an advisor might be understandable, but the survey found that some boomers haven’t even talked to their spouse about how they want to be cared for if they can’t do it themselves. Fifty-six percent of respondents said they’ve haven’t discussed how to pay for long-term care with anyone, not even their spouse, and 43% haven’t talked about what kind of care they would want.

They might think it’s a conversation they just don’t need to have. Only a third said they might ever need long-term care. The survey referred to data from the Department of Health and Human Services, though, that showed the chance of needing care was closer to 70%.

In addition to setting their clients straight on being prepared for a common eventuality, advisors can also disabuse them of misconceptions about long-term care in general. The majority of respondents underestimated the cost of a year in a nursing home by almost half, putting the average cost at almost $47,000. The actual cost is over $90,500, according to Bankers Life. When asked to estimate the hourly rate for a home health aide, though, respondents significantly overestimated the cost. According to the 2013 Genworth Cost of Care survey, the national rate for a home health aide is $19 per hour.

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