Example

ValuStox allows you to get fundamental data on 8500+ stocks, updated weekly from our web site. For illustrative purposes, let’s take a look at the familiar 30 stocks that make up the Dow Jones Industrial Average:

1. Select “ValuStox->Stock lists->Standard Lists.” Then select “30 Dow Jones Industrials” from the drop-down list type.

a. Click on “ValuStox™” on the Excel menu bar:

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b. Then you will see the following dialog:

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c. Click on the drop-down button to display the list options, and drag the mouse down until “30 Dow Jones Industrials” is highlighted.

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d. Let go of the mouse, and you should see the following:

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e. Click on OK, which should give you the following Excel worksheet:

2. After the 30 stocks have been listed, you’ll be asked if you’d like to update fundamental data. Click OK.

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3. You’ll then be asked if you want to update prices. Click OK.

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4. You should now have a spreadsheet with cells highlighted in green, yellow, or red. A “buy” and a “sell” price will be listed for each stock, except for those stocks with no projected five-year upside.

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a. Cells in green are “good”—they meet our criteria. For example, we’re interested in companies with a 20% or more five-year compound upside potential. That cell will be in green for those companies that meet or exceed the 20%.

b. Cells in yellow are “OK”. For example, if the return on a stock is less than 20% (but no less than 5%) over the next five years, that cell will be yellow. If all other criteria are met, then this stock would be rated a “hold”, since the current price falls between the 5% and 20% compound upside benchmarks.

c. Cells in red fail our criteria in that particular area. For example, if a company is projected to return less than 5% compounded over the next five years, the cell is red. It doesn’t necessarily indicate that the company is poorly run, just perhaps that the price is too high for us to consider a purchase right now.

5. Companies are rated as a “buy” if and only if they pass several criteria, which you are free to specify. By default they are the following Warren Buffett inspired metrics:

a. Score: 75 or above. Scores are a combination of financial strength, earnings predictability, PE, ROE, EPS growth, sales growth, debt levels, and several other factors. You are free to specify which financial parameters are used in the scoring.

b. Five-year compounded upside potential: 20%+.

c. Earnings predictability: 90% or better.

d. Overall financial strength: A or better (on a scale from “C” to “A++”).

e. PE greater than FPE. Next year’s PE ratio (the “forward PE or FPE) is less than the current PE. This means that next year’s earnings are projected to increase.

There are other metrics that have shown historical predictive value, such as low price to sales ratio, that you may wish to incorporate.

6. Select “ValuStox->Sort Options->Sort Using Selected Method”:

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This sorts the worksheet by Buy/Hold/Sell, then by score (descending), then by upside potential (descending). This puts the stock of interest at the top of the list:

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Note that this particular day, only one stock (Home Depot) satisfied all of our fundamental criteria, and thus rates a “buy”.

7. It is useful to take a look at a fundamental chart on several critical financial metrics over the past several years. To do so, select “ValuStox->Fundamental Data->Chart Fundamental Data…”.:

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Select the company from the drop-down menu, then click on a chart type (such as earnings per share):

Note how smooth the resulting graph is. This indicates that, at least up until now, Home Depot has produced steady increases in earnings:

The “R²” value of 98% indicates that the independent variable (in this case, time) accounts for 98% of the movement of the dependent variable (in this case, earnings).

8. To get a price chart on a company, just left-click on the hyperlinked stock ticker:

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By default, this opens a web browser to the BigCharts web site:

Select “ValuStox->ValuStox Options->Miscellaneous Options” for other price charts.

9. To get the story on a company, click on the hyperlinked company name:

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By default, this opens a web browser to the MSN/Money site:

Note there are links to many other sources for such as SEC filings, analyst reports, and news stories.

Gordon Gerwig, founder of Spredgar Software, has a B.S. in Electrical Engineering and Computer Science from the University of California at Berkeley and an M.B.A. in Finance from the University of California at Davis. Gordon Gerwig and Spredgar Software have been written up in Online Investing for Dummies, Online Investing Hacks, and in the Innovator, the U.C. Davis Graduate School of Management's alumni magazine. Gordon is an individual investor and a member of the American Association of Individual Investors (AAII). He is a CERTIFIED FINANCIAL PLANNER, a Licensed International Financial Analyst (LIFA) , and is an associate member of the CFA Institute. He has worked in financial services as a advisor for Morgan Stanley and American Express. He has experience in small business lending, valuation and consulting. Spredgar Software's mission is to provide unbiased financial investment data through Excel add-in software for the private investor, the professional analyst, and the academic.