Cherry Picking The Diamonds From The Stock Market

I'm comparing stocks for a game. How do I compare shares? What is the best benchmark of future stock growth?


Stock valuation can be pretty complicated, but a few good places to start for a beginner are P/E, EPS Growth, and D/E, and cash on the balance sheet. I'd look at these numbers vs. the company's industry average, to see how its done vs. other companies doing the same type of business. Low P/E indicates the stock may be undervalued, EPS Growth allows you to see how the company is consistently growing their bottom line, Debt/Equity lets you know the level outstanding debt obligations they have. I also like to see the cash and cash equivelents, to see how that compares to other companies. The Cash ratio also allows you to see how much liquid money they have available to pay for the liabilities they have. A number greater than 1 is considered ok, I like 1.5 or better. Hope that helps.