Identifying Good Stock Investments Investment and Finance 12 Ms. Stewart

How can I Identify a Good Stock? If it were easy to pick a good stock, we’d all be millionaires. Unfortunately, it’s not that simple. How do you assess which stock investments are more likely to work for you? Reading the disclosure documents is a great place to start.

Disclosure Documents Disclosure documents include: 1) Annual/Quarterly Reports 2) The company prospectus 3) Press releases 4) Company websites/Electronic Communication

1) Annual/Quarterly Reports One of the best sources of investor information. Tell you whether the company is making or losing money and why. Have information about the company's operations and financial statements. May also contain comments from the president or chief executive officer on how the company did over the past year, as well as industry trends and events that may have affected stock performance.

2) The Company Prospectus Published when a company issues stock. Has information you find in an annual report, including audited financial statements and a summary of the major factors affecting the company.

3) Press Releases Issued when a company decides a change is important enough to be shared with the public. Investors should pay close attention to press releases from a company. Investors should pay close attention to press releases from a company.

4) Company websites/Electronic Communications Provide currents news as well as annual reports, quarterly statements, and past press releases. May include speeches and presentations by executives and analysts' reports. May offer conference calls with analysts as a webcast. Some telephone conference calls are opened up to the public and any investor can listen in.

Wrong/Misleading Information The prospectus will tell you your legal rights to stop a purchase or to sue for damages. These rights are limited. That’s why it’s so important to do the research and choose your investments carefully. You won’t find a lot of history if the company is fairly new. Also, most privately held companies are not required to disclose information about their business activities. For information on these companies, contact the firm directly and ask for the information you need.

SEDAR You’ll find many documents at the System for Electronic Document Analysis and Retrieval (SEDAR). SEDAR is the official website where public companies file documents required by securities laws in Canada. Investors can search the SEDAR site by date, document type, company name, or industry sector. You’ll find many documents at the System for Electronic Document Analysis and Retrieval (SEDAR). SEDAR is the official website where public companies file documents required by securities laws in Canada. Investors can search the SEDAR site by date, document type, company name, or industry sector. System for Electronic Document Analysis and RetrievalSystem for Electronic Document Analysis and Retrieval

Information is Key! Reading disclosure documents can help you separate companies that have good growth potential from those that don’t. Reading disclosure documents can help you separate companies that have good growth potential from those that don’t.

What can I learn from disclosure documents? Does this company have a good track record? You’ll find out if it’s making or losing money and whether it has been growing. Companies that have a good track record of growth over many years may be likely to increase their share price in the future in a steady way.

What can I learn from disclosure documents? Does this company have the potential to grow? The disclosure documents tell you what business it’s in, who it competes with, and how it plans to grow.

What can I learn from disclosure documents? What things can affect the future of this company? A recent prospectus will tell you about the possible future risks. The section on risk factors warns you about anything that could affect the company’s success. A recent prospectus will tell you about the possible future risks. The section on risk factors warns you about anything that could affect the company’s success.

Warning Signs Is the company trying something new and untested? If yes, who are its competitors and how successful are they? If other players are more established, this company may have a tough time breaking into the market. If other players are more established, this company may have a tough time breaking into the market.

Warning Signs Are there signs the company will need financing soon? If so, what are its plans for raising funds? If the company borrows money a lot, it may need more money again in the future. If the company borrows money a lot, it may need more money again in the future.

Warning Signs Do the company’s directors and other officers have a solid track record of success? How are they compensated? Do their salaries seem reasonable compared to how the company is doing? How much of the company do the directors and officers own? Have any directors ever been in trouble with regulators?

Remember! A company’s past success is no guarantee of future growth. Results may be strongly affected by general economic and trends. Sudden bad news can also send a stock price falling.