Stock Selection Approach by Courtney Smith and Company - Stock selection is an important part of stock market success.

stock selection philosophy

~ Stock Selection Philosophy ~

We seek stocks that provide both value and growth. We further wish to buy only those stocks that are currently in bull markets

Some stocks look very attractive from a classic value perspective. They have a low P/E, low debt/equity ratio, and trade near book value. Unfortunately, these companies are often at low P/E's because they have little or no growth prospects. As a result, these "value" stocks are actually very risky because competitive threats may erode their profitability.

On the other hand, some stocks look very attractive from a classic growth perspective. They have high growth rates and high ROE's. Unfortunately, many of these companies are using high quantities of debt to finance their growth. In addition, many of these companies have growth rates that are unsustainable. As a result, many of these companies have P/E's or market capitalizations that reflect not only strong growth prospects but nirvana.

Of course, there are also special situations that do not fit these criteria. An example might be a company that is just coming out with new products or doing acquisitions. Here, analyzing organic growth can be misleading and/or irrelevant.

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Courtney Smith & Co. is an investment management company
specializing in stock market timing and stock selection.
© 2002-3 Courtney Smith & Co., Inc.

Courtney Smith & Co.
Box 7603, New York,
NY 10150-7603
TEL: (917) 327-3536
FAX: (270) 626-6500

 

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