Rule #1 Analysis Spreadsheet: Updated with Auto Stock Lookup

Update October 7, 2014: Spreadsheet has been updated.  See http://goo.gl/KEm3ar

Update January 26, 2012: I've updated the sheet.  Go to the Investing Resources to download the latest sheet.

FINALLY!  It's been a couple of months since I wrote.  A newborn and a 2-year old definitely takes up a majority of my free time!  Today was a bit of a vacation.  The family is staying over at my parents' for the weekend and so, I have some time to sit down and do some personal stuff, while there are plenty of people looking after the kids!

I promised, earlier on, to publish my Rule #1 spreadsheet with the auto stock lookup.  You can access the spreadsheet HERE.  The first thing you need to do is make a copy of the sheet so you can make edits to the sheet.  Click on File > Make a Copy, and name the file to your liking.  Oh yeah, you'll need a Google account.

How the Sheet Works
The main difference in the sheet lies in the "Stock List" tab.  The tab is designed to run the Rule #1 analysis on the symbols that is specified in column A.  Here's a simple procedure on how to use the sheet.

1. Fill in Columns A and B with the symbols and their respective stock exchange.
2. Click on Automation > Run Stocks - Start at Top.  This will start the script and the table will be filled with the Big 5 numbers.

If you have a long list of stocks, the Google script may time out and stop in the middle of the list.  If that's the case, use Automation > Run Stocks - Continue from List instead.  It will continue where you had left off.

In addition to just displaying the Big 5 numbers, I've also added an arbitrary formula that will rate the stock based on the numbers in Column R.  It basically gives a higher score if the Big 5 numbers are greater than 10%, a mediocre score if they are between 0 to 10% and a negative score if the numbers are less than 0%.  Feel free to change this formula to whatever you want it to be.

Data...a Lot of Data!

When I had started working on this sheet in the summer, one of my readers, Brad, got me a very comprehensive list of US stock symbols.  Due to Google's script time out issue, it took me quite a while to go through all 6000+ symbols...but here it is, available to you.  It's under the "Copy of Stock List" tab.  Keep in mind that the data is from the summer, which may be a little outdated.

Brad also gave me a lot of suggestions to add more fields such as P/E ratios, sticker price, current stock price, etc.  I haven't had time to implement much of what he suggested.  For now, I would use this sheet as a stock screener.  Essentially, it'll give you a list of stocks with a Rule #1 score, and you can filter the stocks based on the score.  Take the ones you like and do more research on them.

Let Me Know...

Please send me any feedback that you may have.  I'd like to develop the sheet further to help you out!  Hopefully, it won't take me another 6 months to release the next version!

The Death of (First) Solar?

It's been a dark month for solar...One of my favourite stock just lost a good chunk of its value.  Is this a sign of things to come?  Will solar energy slowly fizzle out?

Let's do a quick re-cap of the happenings in the industry.  With a couple weeks of each other, two US solar panel manufacturers, Evergreen Solar and Solyndra, filed for chapter 11 bankruptcy protection.  The political fallout that ensued included the US Congress putting extreme pressure on the Department of Energy for its $500+ loans to Solyndra.  This puts the loan guarantees that First Solar was looking for in jeopardy.  Word on the street is that it will not get one of the three loans that it was seeking from the DOE.

So, what does the future hold for First Solar?  Or solar in general?  Surprisingly, it is good!  Here are a few reasons.

Traditionally, Europe has been the biggest solar market, with Germany and Italy being top dogs.  With the Eurozone debt problems, they will soon be replaced by the following markets: US, China, and India.  Just look at the comparison.  You have Germany, Italy, Spain, etc....then compare them to US, China, and India.  Even just one of the three nations mentioned can overshadow the entire European market.

Back to First Solar.  So, what happens if it doesn't get the loans from the DOE?  Well, how do other companies get financing?  They sell bonds.  That is exactly what First Solar will do.  True, the cost of borrowing will rise, but the impact is likely just slightly reduced earnings.  At its current price of $73.52, by the end of Q4, the P/E ratio would be 8.0 with the current analysts' estimate of $9.13/share earnings estimate.  Even if FSLR misses by a full dollar, the P/E would a mere 9.0.  The current stock price is absolutely unjustifiable.  By the way, I bought some more shares at $82.50, and will continue to do so.

Going back to Evergreen and Solyndra.  Do take note that the cost per watt of these two companies are greater than $2/watt and $3/watt, respectively.  First Solar is closer to $0.70/watt.  Now, you see why the former two companies went bankrupt.  I have already written about the impending consolidation in the solar industry, with a prediction of Evergreen going belly up coming true *patting myself on the back*!  Look at the days of the automobile.  In the early days of the 20th century, there were hundreds of auto makers in the US.  By the end of the Great Depression, only three survived.  The ensuing years became a time of boom for the Big Three.  I believe that solar energy will be similar.  There are many players now, but we are beginning to see a phase of consolidation.  A few will remain after the dust settles.  My bet is with First Solar.

Do I believe the market is being irrational?  I believe so.  I think the downside risk of buying First Solar now is very minimal.  It was much riskier to have bought the stock at $120, but I still did, because I believed its business was intact.  So, at $73, are you kidding me?  If I were any less responsible, I'd be taking a large chunk of money out of my home equity line of credit!

But, of course, I have to be extra responsible now because our second child, Athanasius, was born just last month, on August 17!  I hope this was a good enough excuse to have put a pause on my blogging!  There's a lot I need to write about, including rolling out an update to my Rule #1 spreadsheet.  I'll do my best to squeeze in some writing time!

Update September 22, 2011 - You would have thought that this guy plagiarized my post!  Great minds think alike! :)

Double Dip? The Question Surfaces Again!

Hello All!  As you may have noticed, the frequency of my posts have dropped drastically over the past few weeks.  That was due to my move to our new house!  Almost all of my free time has been consumed with unboxing, unpacking, cleaning, assembling, etc.  The recent action in the market has prompted me to pick up the pen, so to speak.  As well, I am currently on a business trip and have some free time in the evening to write.

Market Turmoil
To recap, the US Congress took its sweet time and waited until last minute to pass a bill to raise the debt ceiling last week.  The bill was a compromise, something no one really liked.  Not only did the market not rally at the news, it actually shed a couple of hundred points within a few days.  To add fuel to the fire, S&P downgraded the US debt rating to AA+ from a perfect AAA last Friday, after market close.  As expected, a huge selloff happened today, Monday.

Now, it is fair that the question regarding the possibility of a double dip resurfaces.  I wrote about the same double dip issue last year.  I focused more on the market double dip rather than an economic double dip.  I did not believe the market would dip back down to ~700 pts (S&P 500), simply on the assertion that it took the bankruptcy of Lehman Brothers and the near insolvency of many big banks to take the market to those levels.  Today, companies are stronger than ever.  Even the worst offenders in 2008 are making money, companies like Citigroup and General Motors.  We are actually not in too bad of a situation.  This is a market correction...I repeat...this is a market correction.  My guess is that the S&P500 index will bottom out at around 1050 pts +/- 50 pts.

The pessimists will have you doubting these numbers.  The companies are making money, but they're not spending it, they say.  The companies aren't hiring and there is no job recovery.  Last I checked, initial jobless claims were down in the low 400s and the US added 117K jobs in July.  They may not be huge numbers, but they are positive numbers nonetheless.  Unemployment will not go away overnight.  As corporate balance sheets strengthen, companies will start to spend and hire.  Imagine that you are the CEO of a company.  You are making good profits and so are your competitors, and things have been well for over a year now.  What do you do?  Do you keep hoarding cash?  Of course not!  You're probably thinking that you need to invest in the company lest your competitors start taking market share.  So, you begin hiring and spending money.  When companies do well, the economy does well.  Why?  The companies are the economy (or at least a big part of it).

Is there a chance that I'm wrong?  Absolutely!  However, I'm willing to place a bet on my hunch.  You don't sell after the market has already sold off!  The market has already fallen from 1370 to 1120 pts.  If my prediction holds true, we are closer to the bottom than the top.  It's time to start buying.

What About All This Debt and Deficit?
I wished I could tell you the answer to this question.  I'm not an economist and will most definitely not pretend to be one.  (I did buy a macroeconomics textbook recently...hoping to get to it soon.)  Look, the US did not default on its debt.  It simply got downgraded by S&P, which coincidentally is also a rating agency that gave toxic mortgage backed securities AAA credit rating a few years back.  Even if the US did default on its debt, it would not be the end of the world.  Many countries have defaulted on debt before, and they're still around.  Obviously, a default by the biggest economy in the world would send ripples throughout the world, but it didn't happen after all.  It wasn't even close to happening.

I don't know how the US government will solve the debt issue, but I am sure it will.  But even if it doesn't, will the world end?  It surely will not.  Will all of the awesome companies all of a sudden forget how to make money?  I doubt it.

What to Do
There isn't much to investing.  Pick good companies and buy them at excellent prices.  This works whether the economy is doing well or poorly.  It works especially well when everyone is selling.  And this is the time.  Looking at my portfolio, I see First Solar (Ticker: FSLR) at $99.  I bought some at $102 on Friday.  If it falls to $95, I will buy some more.  This price is absolutely not justifiable; it is worth at least $140, if not more.  The same argument goes for the other companies that I own.  So, run your analysis again on your own stocks, and see what the entry or MOS price is.  Remember that famous mantra, "be greedy when others are fearful..."