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May 31, 2012 -

In This Issue:

Courtesy of the Investor Advisory Service, a Few Stocks at the Right PEG

One of the ways that our analysts and investors evaluate the valuation of a stock is to compare its current price/earnings ratio with the company's projected earnings per share growth rate. This comparison is known as the PEG ratio.

The PEG ratio is calculated by dividing the P/E ratio by the EPS growth rate; a PEG ratio of 1.0 or less is considered extremely favorable.

More-consistent, higher-quality companies tend to trade at higher PEG ratios, while less-consistent companies may trade at lower PEG ratios. However, one should be wary of stocks sporting very low PEG ratios, as it may suggest problems ahead. On the opposite end of the spectrum, high PEG ratios suggest an investor is "paying up" for growth. As a test of fair valuation, we suggest that investors look for stocks that have a reasonable P/E ratio compared with its projected EPS growth rate.


Buying and Selling Between Club Meetings
by Douglas Gerlach
President, ICLUBcentral Inc.

One of the key reasons BetterInvesting’s growth stock selection methodology works so well for investment clubs is that it results in a portfolio of high-quality companies that tend to be less volatile than many other types of investments. A monthly meeting is frequent enough to properly manage the club’s portfolio. When news — either good or bad — affects these kinds of companies, the opportunity to buy or sell is usually still available at the next club meeting.

Still, a club may run into a situation when taking action in between meetings might be desirable. Maryel Battin and her fellow club members in the Professional Women’s Investment Group of Macon, Ga., are considering this issue.

She writes: “Our club is researching the idea of allowing stock to be purchased and/or sold via email vote of the members. Do you have any thoughts on this?”


How Take Stock Can Help Your Club Invest Successfully

For absolute beginners to the stock market, Take Stock on is almost certainly the easiest way to become indoctrinated into the BetterInvesting methodology. To use the tool, just enter a ticker symbol and Take Stock carries out a powerful series of computerized calculations to determine whether a stock is a reasonable candidate for your portfolio at its current price; it will even generate a printed Stock Selection Guide. Take Stock will also warn you whether you should run from the stock as quickly as possible!

Take Stock isn't just for beginners, however. Some investment clubs incorporate Take Stock's unyielding logic into every stock considered by its members. Even if you use the Stock Selection Guide via Toolkit 6 or BetterInvesting's online tools, it can be illuminating to compare any stock study with a completed Take Stock analysis during your club meetings.

In a matter of moments, the club has an instant comparison by which it can compare the judgment of any member to the judgment of Take Stock. If Take Stock agrees with the member's judgment, the company is deemed to have passed the litmus test of being a quality stock. If the results of the SSG generated by Take Stock wildly diverge from the member's analysis, the stock is sent back to the member for further review.

These clubs are not using Take Stock to make their investment decisions for them. They are merely using the advanced technology of Take Stock as another tool to aid in the stock selection process. They research companies thoroughly before purchase and compare stocks with their peers before buying. But Take Stock helps the club to identify problems that may have been less obvious, or to flag overly optimistic user expectations of future growth.

This technique is simple enough to be used by every club when examining a stock, serving as a double-check of member SSGs (particularly for clubs with new members who aren't fully up to speed on the SSG) and as a catalyst for discussion about what makes a high-quality growth stock that will be a worthy addition to the club's portfolio.

At just $49.99 a year, perhaps you should think of Take Stock as a bit of insurance that your club is using the BetterInvesting methods appropriately. If Take Stock helps your club to avoid buying just one stock that isn't likely to live up to your expectations, won't that be $49.99 well spent?

Try Take Stock risk-free, with no credit card required, for 45 days as part of a subscription. Sign up today!

May 31, 2012


We're ICLUBcentral Inc.
We develop high-quality software products and web services for individual fundamental investors, and powerful accounting tools used by the majority of US investment clubs.

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Madison Heights, MI 48071

ICLUB Links:
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Events Calendar:
First Tuesday of each Month: Toolkit 6 User Group led by Doug Gerlach, ICLUBcentral Inc.

Third Tuesday of each Month: New Investment Club Orientation led by Doug Gerlach, ICLUBcentral Inc.

Doug Gerlach will also be speaking at the following events:

June 5, 2012: Toolkit 6 User Group Webinar; Live Stock Study using Toolkit 6
Doug Gerlach, Speaker

June 7, 2012: Retail Investors Conferences; Doug Gerlach, Speaker

June 19, 2012: Investment Club Operations Webinar; Handling Investment Club Member Withdrawals
Doug Gerlach, Speaker

July 3, 2012: Toolkit 6 User Group Webinar; Diving Into Dividends in Toolkit 6
Doug Gerlach, Speaker

July 12, 2012: Retail Investors Conferences; Doug Gerlach, Speaker

July 17, 2012: Investment Club Operations Webinar; Passing the Torch: Preparing Your Club's Next Treasurers
Doug Gerlach, Speaker

Aug. 2, 2012: Retail Investors Conferences; Doug Gerlach, Speaker

Submit Your Event!

Like 7-Eleven, we're not always doing business, but we're always open — go to the ICLUB Store and outfit yourself with the simple, yet powerful tools and services that smart investors have been using to grow their portfolios since 1989.

Got a Problem?
Support is here to help. You can reach them M-F, 9:30 AM-6:00 PM at 877-33-ICLUB (877-334-2582), or use the e-mail web form at ICLUB Support.

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