Page 282 - How to Make Money in Stocks Trilogy

160 A WINNING SYSTEM

displaying strong earnings in the group, chances are you may have selected
the wrong investment.

Where to Find Current Quarterly Earnings Reports
Quarterly corporate earnings statements used to be published in the busi-
ness sections of most local newspapers and financial publications every day.
But most newspapers have downsized their business sections these days,
dropping data right and left. As a result, they no longer adequately cover the
critical facts investors need to know.
This is not true of Investor’s Business Daily. IBD not only continues to
provide detailed earnings coverage, but goes a step further and separates
all new earnings reports into companies with “up” earnings and those
reporting “down” results, so you can easily see who produced excellent
gains and who didn’t.
Chart services such as Daily Graphs and Daily Graphs Online also show
®
earnings reported during the week as well as the most recent earnings figures
for every stock they chart. Once you locate the percentage change in earn-
ings per share when compared to the same year-ago quarter, also compare
the percentage change in EPS on a quarter-by-quarter basis. Looking at the
March quarter and then at the June, September, and December quarters will
tell you if a company’s earnings growth is accelerating or decelerating.
You now have the first crucial rule for improving your stock selection:
Current quarterly earnings per share should be up a major
percentage—–25% to 50% at a minimum—–over the same quarter the
previous year. The best companies can show earnings
up 100% to 500% or more!

A mediocre 10% or 12% isn’t enough. When you’re picking winning
stocks, it’s the bottom line that counts.