To find the right stock for your needs I suggest taking a few steps below.
First ask yourself, do I think I can profit in this industry from this stock?
How much do I think it will increase in a 5 year period?
To evaluate your stock you should first look at the following.
1) Earnings Presentation (EPS) and Stock Price
Earnings Presentation (EPS) – is a snapshot of the earnings statement for the company of the period. The EPS for Q2 2015 was $0.20, down from $0.32 in 2014 and $0.41 in 2013. This compares to a 21.6% drop in share price.
The EPS for 2015 also represents the 5 year period ending June 30, 2015. At the moment of this writing, the 10 year EPS for the most outstanding Canadian company, RIM Ltd, on the NASDAQ Stock Market traded at $5.67. For comparison, the 10 Year EPS for the Dow Jones Industrial Average was $27.63, up from $24.30 in 1995.
With this information you can determine how much of the value of the company is directly attributable to the earnings. For example, if you paid $1,000 for RIM, the EPS would be $80 million. This indicates that the earnings from all products and functions of RIM could bring in close to $200 million if the company continued on its current course as opposed to the trajectory of the stock.
If your investment in RIM is in fact just a stock dividend pay out, your investment will provide income or return no matter what, and therefore no stock dividend income will be received in return.
2) Market Cap
The market cap on RIM is at an all time high: US $21.9 billion. This is a phenomenal amount, and as I said that’s $3 billion more than what the Canadian market capitalization of RIM is at.
With the rise in RIM’s market cap, the total value of the company has risen at an astonishing pace in the past 2.5 years-and this figure could potentially expand further.
By contrast, the total market capitalization of TSX Venture is a little more than US $3.65 billion. In contrast, the Canadian capitalization of TSX Venture is just over $3 billion.
The total value of the company is approximately $21 billion. That means the potential
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