If you have been following the Shopping for Shares rules for long term investing, you know that there are 5 different criteria that I look for to determine what I’m going to invest in. They are ROE, Earnings Stability, Debt Equity Ratio, 5 year % history and if the company is currently trading at less than 16 times EPS.
Usually I look at the top stocks from the All Ords (top 500) or even the ASX 200 (top 200), but if I’m feeling particularly lazy I’ll just look at the ASX 20 to see if there are any companies there that fit my criteria.
And wouldn’t you know it, there is.
Here is the research from the top 20 Australian companies and the two that I think could be potential winners.
From this research I particularly like CBA (Commonwealth Bank) and WOW (Woolworths). The both have really nice Return on Equity (ROE) figures and their Earnings Stability figures are also very good.
And considering that they are both trading at below 16 times EPS then they are great value as well. Looks like I might have found some winners. Yah.
2 Comments
witht he EPS, I don’t really understand what it means, I do understand that it means earnings per share but I do not understand the ‘trading at below 16 times EPS’…. HELP!!
Hi KayKay,
Find the EPS of the company you are interested in. So, say for ANZ, right now it’s EPS is 218.3. Now times that by 16: 218.3 x 16 = 3492.8. If you think of that number as ‘cents’ instead of just a number it makes it $34.93 (rounded up). Currently it’s trading at $25.45 which is lower than $34.93 and therefore is currently good value.
I hope that helped!
Tracey 🙂