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30 Cards in this Set
- Front
- Back
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What is a growth stock?
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Shares in a company whose total earnings are expected to grow at an above average rate.
A characteristic of a growth stock is a high price/earnings ratio. Technology stocks are a good example of this. |
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What is a value stock?
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When the shares in a company are considered attractive because the company is undervalue, usually because it has a low P/E ratio. Value investors buy value stocks in hopes that other investors will discover the stock is undervalued and buy in.
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What is a Bull market?
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A market in which prices of a certain group of securities are rising or are expected to rise.
Typically this is a period of optimism in the market. |
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What is the book value of a stock?
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1. The value at which an asset is carried on a balance sheet. In other words, the cost of an asset minus accumulated depreciation.
2. The net asset value of a company. Calculated by total assets minus intangible assets (patents, goodwill) minus liabilities. It has two main uses: 1) It is the value of the company's assets shareholders would theoretically receive if a company were liquidated. 2) It can be an indicator of an underpriced stock since a company's book value might be higher or lower than its market value. |
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What is a stock?
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Ownership in a corporation which is represented by shares. A holder of stock (a shareholder) has a claim on his/her part of the corporation's assets and earnings. Stocks are also known as equities.
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What is the Dow Jones Utility Average - DJUA?
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The Dow Jones Utility Average is a price-weighted average of 15 utility stocks traded in the United States. The DJUA was started back in 1929.
The utility average tends to decline when investors expect rising interest rates because utilities tend to borrow a lot of money, therefore are more sensitive to changes in interest rates. |
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What is the market value of a stock?
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1. The current quoted price at which investors buy or sell a share of common stock or a bond at a given time.
2. Sometimes referred to as total market value, the market capitalization plus the market value of debt. Market value is often different from book value because the market takes into account future growth potential. |
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What is the Price/Earnings to Growth - PEG Ratio?
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A ratio used to determine a stock's value while taking into account earnings growth. The calculation is as follows:
PEG Ratio = Price/Earnings Ratio divided by the Annual EPS Growth PEG is a widely used indicator of a stock's potential value. By many it is favored over the price/earnings ratio because it also accounts for growth. |
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What are growth rates?
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The compounded annualized rate of growth of a company's revenues, earnings, dividends or another figure. Remember, historically high growth rates don't always mean a high rate of growth looking into the future.
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What is an undervalued stock?
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A stock or other security that is trading below its presumed value. Analysts will usually recommend an undervalued stock with a "strong buy" rating.
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What is a Blue Chip stock?
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A security from a well-established, financially-sound and stable company that has demonstrated its ability to pay dividends in both good and bad times. These stocks are usually less risky than other stocks. The stock price of a blue chip usually closely follows the S&P 500. The name "blue chip" came about because in the game of poker the blue chips were traditionally the most expensive ones.
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What is the Technical rank according to Value Line?
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The Technical rank is primarily a predictor of a stock's short term (three to six months) relative price change. It is based on a proprietary model which examines 10 relative price trends for a particular stock over different periods in the past year. It also takes into account the price volatility of each stock. The Technical ranks also range from 1 (Highest) to 5 (Lowest).
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What are earnings?
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The net income of a company during a specific period. Generally, but not necessarily, referring to after-tax income. Perhaps the single most looked at number in a company's financial statements, earnings show how profitable a company is.
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What is a dividend?
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A cash payment using profits that's announced by a company's board of directors to be distributed among stockholders. Dividends may be in the form of cash, stock or property. All dividends must be declared by the board of directors.
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What is the Dow Jones Industrial Average - DJIA?
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The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896. Often referred to as "the Dow," the DJIA is the oldest and single most watched index in the world. The DJIA includes companies like General Electric, Disney, Exxon, and Microsoft.
When the TV networks say "the market's up today," they are generally referring to the Dow. |
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What is the New York Stock Exchange?
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A corporation, operated by a board of directors, responsible for setting policies and supervising the stock exchange and its member activities, and listing securities. The NYSE also oversees the transfer of members' seats on the Exchange and judging whether a potential applicant is qualified to be a specialist. The NYSE uses floor traders (humans) to make trades, whereas the NASDAQ and many other exchanges are computer driven.
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What is a P/E ratio?
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A Price/Earnings Ratio is calculated by dividing the price of a stock (usually the current price) by twelve months of earnings. If, for example, a stock is selling at $40 a share and its annual earnings are $2.00 a share, its P/E is 20.
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What is the Timeliness rank according to Value Line?
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The Timeliness rank is Value Line's measure of the expected price performance of a stock for the coming six to 12 months relative to our approximately 1,700 stock universe. Stocks ranked 1 (Highest) and 2 (Above Average) are likely to perform best relative to the approximately 1,700 stocks we follow. Stocks ranked 3 are likely to be average performers. Stocks ranked 4 (Below Average) and 5 (Lowest) are likely to underperform stocks ranked 1 through 3 in Value Line's universe.
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What is the Standards and Poor's 500 Index?
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An Index consisting of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value weighted index (stock price times number of shares outstanding), with each stock's weight in the Index proportionate to its market value.
The S&P 500 is considered to be a benchmark of the overall stock market |
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What is the Safety rank according to Value Line?
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The Safety rank is a measure of the total risk of a stock compared to others in our approximately 1,700 stock universe. Value Line ranks each stock from 1 (Highest) to 5 (Lowest). The Safety rank is derived from two measurements:1)Financial Strength is a measure of the company's financial condition, and is reported on a scale of A++ (highest) to C (lowest). The largest companies with the strongest balance sheets get the highest scores. 2) Price Stability is based on a ranking of the standard deviation (a measure of volatility) of weekly percent changes in the price of a company's own stock over the last five years, and is reported on a scale of 100 (highest) to 5 (lowest) in increments of 5. Generally speaking, stocks with Safety ranks of 1 and 2 are most suitable for conservative investors
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What is a BETA according to Value Line?
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Beta is a a relative measure of the historical sensitivity of the stock's price to overall fluctuations in the NYSE Composite Index. A beta of 1.50 indicates a stock tends to rice (or fall) 50% more than the NYSE Composite Index.
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What is National Association of Securities Dealers Automated Quotation System?
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NASDAQ is a computerized system that facilitates trading and provides up-to-the-minute price quotations on some 5,000 of the more actively traded over-the-counter stocks. The Nasdaq is traditionally home to many high-tech, very volatile stocks. The "big ones" include Microsoft, Intel, Dell, and Cisco.
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What is a Bear market?
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A market in which prices of a certain group of securities are falling or are expected to fall. A downturn of 15%-20% or more in more than one index (Dow or S&P 500) is considered a bear market.
When you see a bear what do you do? PLAY DEAD! |
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What is net income?
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The company's total earnings, reflecting revenues adjusted for costs of doing business, depreciation, interest, taxes and other expenses. Often referred to as "the bottom line".
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What are earnings?
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A company's total profit before nonrecurring gains or losses, but after all other expenses.
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What are outstanding shares?
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The number of shares that are currently owned by investors. This includes restricted shares (shares owned by the company's officers and insiders) and shares held by the public. Shares that the company has repurchased are not considered outstanding stock. Also known as "issued shares" or "issued and outstanding".
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What is American Depository Receipt - ADR?
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A stock representing a specified number of shares in a foreign corporation. ADRs are bought and sold in the American markets just like regular stocks. ADR's are listed on the NYSE, AMEX or NASDAQ.
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What is Dow Jones Transportation Average - DJTA
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The Dow Jones Transportation Average is a price-weighted average of 20 transportation stocks traded in the United States. The average was started back in 1884.
This index includes airlines, railways, trucking, and delivery companies. |
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What is the EPS of s stock?
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The portion of a company's profit allocated to each outstanding share of common stock. Calculated by:
Net Income - Dividends on Preferred Stock divided by the # of Average Outstanding Shares Companies usually use a weighted average number of shares outstanding over reporting term. This is the single most popular variable in dictating a shares price. EPS indicates the profitability of a company. |
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What is Market Capitalization?
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The total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. Market Cap is a measure of a company's size. Brokerages vary on their exact definitions but the current approximate classes of market capitalization are:
Mega Cap: Market cap of $200 billion and greater Big/Large Cap: $10-$200 billion Mid Cap: $2 billion to $10 billion Small Cap: $300 million to $2 billion Micro Cap: $50 million to $300 million |
