Teaching how to choose and analyze profitable stocks
stock trading
the first factor i do when i assume about investing uh is i focal point on dropping cash ok i am gonna say that once more due to the fact it sounds bizarre however i definitely center of attention on dropping cash uh for investing and and
this is due to the fact i i suppose a lot of humans when they begin like investing specifically uh they they have a tendency to have these thoughts of turning into wealthy of getting rich um and making heaps of cash and i suppose this is one of the largest troubles proper now is is human beings have these views of getting rich and so
they’re blinded by way of these potentialities of making a lot of cash in the inventory market that they give up up making rash selections they make gambles as a substitute of investments and so my purpose is usually to center of attention on dropping cash due to the fact if you can restriction your downside
and then focus on you recognize growing your upside it really is the most vital issue right here you comprehend if if you have an funding and you lose ninety on that funding now to get again to the place you commenced you have to make a 1 zero return to get again from the place you
started after you misplaced ninety you have to make a thousand percentage return to get returned to zero k so this is this is like a surely groundbreaking like idea that you want to recognize is that constantly center of attention on chance continually make certain that you are investing alternatively than
gambling or speculating um due to the fact if you are no longer working on limiting your draw back you are you are going to get wrecked in the markets i imply it takes place to so many human beings uh and if you desire to gamble i suggest truely simply simply go to a on line casino um due to the fact if if you are now not doing any kind of danger mitigation then you
know that is it truly is no longer going to work out very lengthy time period so what i am usually doing is i am strolling eventualities and i am searching at what’s the worst case feasible state of affairs for my portfolio so if i seem at my basket of shares that i would possibly have say i have 15 shares what’s the worst
case state of affairs with the economic system uh may want to we enter into a recession each single feasible worse case state of affairs i am walking all these to make sure that i am nevertheless precise hedged we will speak about hedging portfolios and in all likelihood a specific video um due to the fact these days we’re virtually focusing on you understand how to simply select uh shares um but
another actually essential aspect right here is getting rid of emotion k so attempting to throw emotion out the door and definitely center of attention on good judgment when you are discovering shares to make investments into um and tying that in with emotion is is going to be taking
your time with investments so i commonly have a position the place i do not make investments into a organization inside the first 24 hours of discovering that organization so this is why like warm inventory recommendations each person who’s telling you you recognize purchase this inventory it is going to blow up subsequent week or
something else alongside these traces i have a tendency no longer to comply with these i throw action out the door and absolutely simply focal point on good judgment and taking my time transferring slowly and making sure that i completely apprehend a employer earlier than i simply begin investing into it so make positive that you .
do this and that each and every single funding that you make is going to be some thing that lengthy time period you experience at ease with and you absolutely apprehend all proper so the final element that i am going to say earlier than we get deep into this video right here is what i continually do for any inventory that i
will discover um so you recognize with the aid of the quit of this video let’s say that we have a inventory that we have picked and we’ve got determined that we desired to make investments into it i will then create a thesis towards myself so this is additionally certainly vital earlier than you purchase a inventory it is essential to create a thesis in opposition to your self so
let’s say that for instance you certainly like tesla and you assume tesla is is going to the moon it is going to you be aware of 4x or 5x in the subsequent 12 months if you accept as true with that um you recognize you should what i would say i used to be doing is then going and discovering all the terrible matters about
tesla and without a doubt digging deep in that humans have this this this frequent trouble the place they begin to get affirmation bias they say oh i like this inventory so they locate all of the suitable information articles about that inventory they locate all the human beings who love that inventory as
well and they kind of acquire with these humans and speak with these human beings what you ought to constantly do is go to the contrary point of view and determine out why these different human beings have a specific standpoint than you so with tesla inventory if i like tesla inventory i am gonna go and discover the human beings who hate tesla inventory and strive to discern out why they hate it so
just consider that as nicely all proper so now let’s discuss about how to select a inventory how do we locate one there are heaps of corporations out there that we can probably make investments into so how do we decide if this is truly a precise organization to purchase um and how a lot do we
invest into it there is a lot of questions that we would possibly have right here so let’s begin off with uh searching at two distinctive techniques for discovering shares and these two techniques are are very unique from every different so one is referred to as a top-down approach and
the different is a bottom-up approach for discovering businesses to invest into so let’s begin off with the top-down method so the top-down method it is in fact going to be um this this uh like upside-down pyramid the place we start
off with searching at the macro uh so we begin off searching at uh the the world economic system we seem at the world and then we slowly whittle it down to the factor the place we quit up with one organisation so with the pinnacle down approach uh what you do for this to discover a inventory to make investments into is you begin with the world financial system you
look at the economic system where’s the economic system going subsequent yr what’s going to be in 5 years 10 years is the world populace developing is it declining proper we begin with that we analyze it we begin to recognize the world economic system then we whittle it down to a country
probably first-rate off your u . s . a . that you stay in due to the fact you already have a respectable perception of what the way of life is you be aware of like a lot of different matters that are vital to apprehend um so then you focal point on analyzing a country’s economic system you research about you understand the fed
or the central financial institution in your u . s . and then after that you proceed to go from the pinnacle down and you cross on to an enterprise so this is what i propose doing if you are doing the top-down approach for discovering organizations to make investments into you truely have to center of attention on a couple of
industries and emerge as an professional on these industries so there are about eleven or 12 like essential industries uh in the world or or like sectors in the market proper you recognize matters like fitness care financials or tech um and so what i
suggest doing is do not attempt to be a jack of all trades and like recognize each uh like area in the complete market due to the fact you are gonna cease up being simply mediocre at that so what i do individually is i select a couple of unique sectors or industries and i sincerely study a lot
about these particular industries and i am going to study books about them i am going to examine dozens of books and i am going to get truely into them and so it truly is the 0.33 stage there we begin international financial system you appear at the countrywide degree then you seem at a like an enterprise so for instance this should be
like the power enterprise i’ve gotten certainly deep into this in the previous couple of months then after inspecting an enterprise and attempting to get an appreciation of the place it is going proper let’s say the power enterprise for instance you analyze it you examine about the whole thing there is to understand about uh like producing electrical energy proper and
you appear at fossil fuels you are searching at photo voltaic you are searching at fusion and geothermal the whole lot you get a definitely strong appreciation of it then from there you cross into core opponents proper and so you begin to appear at a handful of businesses maybe
let’s say you are questioning about investing into um like the photo voltaic enterprise and so you select three to 5 distinctive groups that are all fairly comparable perhaps they’re all in the photo voltaic enterprise you’ve got already analyzed the strength enterprise so you have an
understanding of that now you are examining the photo voltaic unique uh a section there you are searching at three to 5 organizations and then from there you can whittle it down to one enterprise or two corporations to make investments into at the give up of the day that is what i do that is how
i use the top-down approach for discovering shares um you may nevertheless have some questions there like you understand how do you determine on that one remaining enterprise or these two remaining organizations out of all of these however that is how you use some thing like the pinnacle down method you begin with the massive photograph and you go down
to the small photo and you get down to the micro on a precise employer all proper that is one approach the different approach is going to be the complete contrary of that it is known as the bottom-up method and so with the bottom-up approach you actually start
off with the corporation and then you analyze the enterprise and then you begin to analyze you comprehend the countrywide financial system and then you begin to analyze the international economic system so you can use the bottom-up approach as nicely i’ve carried out this in the previous uh the case in which this one would possibly work is for example
maybe the enterprise that you work for you seem to be round you say you understand what i like this organisation i suppose it is a awesome has a super tradition i suppose it is going locations it is developing certainly properly and if you assume it truly is the case then the use of the bottom-up approach you would then evaluate that agency with a couple of
other corporations like the core opponents to that organisation and then from there when you analyze these you say k properly you comprehend what it nonetheless appears like it is it is doing particularly properly in contrast to its rivals then you take it up to the enterprise how’s the enterprise doing over the subsequent 10 years how is it executed in the previous what’s the
future of it so for instance like if it is an oil employer yeah the future of it may no longer be fantastic due to the fact you be aware of 20 years down the avenue uh possibly possibly oil consumption is down or there ought to be some massive shifts in the strength enterprise proper so you go backside up and eventually
get up to the macro so this is one approach as nicely i have a tendency to use the top-down method a little bit greater regularly simply due to the fact i assume it is absolutely fundamental to spend a lot of time examining an enterprise all proper so now i desire to share three extremely good equipment that you can use
for discovering shares and getting very precise with it uh so the first one it is a fundamental inventory screener it is known as finviz they’re no longer sponsoring this like i have no affiliation with them however i truely simply use this internet site pretty frequently um and so let’s simply go on it proper right here and i will exhibit you round a little bit
so finviz in truth what this is it is a inventory screener and they have so many picks up right here so if you click on on screener what we have is all these distinct matters for instance we can type corporations through market cap or through their dividend like
maybe we solely prefer dividend shares or perhaps we prefer some thing in a precise quarter like purchaser cyclicals proper we can determine all of these we can set these uh metrics and then we will you be aware of see what shares will nonetheless healthy into this
criteria um if we go click on over on vital you recognize we have different picks as nicely like you comprehend pe or ahead pe or fee income increase ratio or charge to income this is additionally distinctly essential rate to e book proper so we can begin to surely really
whittle it down right here and locate businesses that we are greater mainly involved in um and you be aware of you are in all likelihood seeing a lot of ratios on right here we are going to speak about some of them right here uh however the reality is if you choose to study about every and each and every one of these your fine wager is going to be analyzing books as a substitute than
watching movies on a subject unique to appreciation ratios and unique you comprehend monetary essentially like measuring the fitness of a organization uh books are going to be your
best wager so every other device that i use um is a internet site known as open insider and there is a couple of different web sites comparable to this as nicely however really what this does is it indicates us uh what executives and the pinnacle shareholders are doing with their shares of a inventory um so
this is simply like i constantly use this earlier than i make investments into a organisation due to the fact i prefer to see the place the heads are of humans who are in cost of this employer if everybody’s promoting the inventory like the executives the ceo if everybody’s promoting the inventory it is a exceptionally awful signal it capability they likely do not accept as true with in the enterprise and it would possibly be
you comprehend the giant going down so you do not desire to be in a role like that individually i would not choose to so like let’s simply seem to be at an instance right here like let’s say we’re wondering about investing into a organisation like air merchandise um and so we can see k nicely we have some human beings promoting we have some people
buying these are all going to be essential human beings open insider is solely humans who have to file with the sec if they very own i agree with over 5 percentage uh of a publicly traded organization they have to
make this submitting um and additionally if they are like an govt in the business enterprise uh or or they’re on the board for instance they have to make these filings with the sec which then will become public records um so with their merchandise you be aware of we can see most these days any individual bought we can seem up who this is proper we can see uh
what they’re in cost of um you can see like a director offered some of these uh different humans bought however some different human beings sold so simply very fascinating to see that um over the previous two years who used to be shopping for and promoting so i like the use of open insider and then the 0.33 device that you can use is some
of the aspects on moomoo they do have a inventory screener characteristic on hand on that as nicely um so you understand you can take a look at that out if you choose to get like truely deep into it uh what i do like about the platform even though is that they have a fairly correct setup for truely doing
like some exceptionally satisfactory technical evaluation uh they have some excellent charting points incredibly comparable to weibull sincerely i used to use weibo a lot for you understand like searching at the specifics on a technical evaluation foundation however moomoo additionally works as properly so these are some notable equipment that you can
use uh for you understand doing some greater lookup about a particular inventory uh now let’s in reality take you thru an instance of doing a speedy and soiled evaluation on a corporation um and so i assume what we’re gonna do is we’re gonna appear at a agency referred to as air merchandise it’s
one that i am invested in um so simply for full disclosure there uh it is a very giant corporation it is like a 50 billion greenback organization or some thing um and it is type of a boring organisation however it is it is one that i recognize a bit so we’re gonna go via the uh the annual
statement it is about a hundred thirty some pages it is gonna be a little bit lengthy um however i will exhibit you the matters that i virtually seem at uh when i am wondering about ultimately like investing into a agency k so in order to do a full evaluation on a organization we want to get the most important
documents which is going to be some thing known as uh a 10k and an 8k so a 10k is their annual uh like assertion it is it is normally going to be a honestly lengthy one it is the most vital and then we have a issue known as an 8k which is going to be a quarterly file on the financials of a
company so all publicly traded organizations in the united states have to launch this records it is a public data um and so you have to be in a position to get entry to this someplace so there may be a couple locations you can get right of entry to it however i discover that the first-rate way to do this is by
going to the investor members of the family web page of the business enterprise that you are involved in and this is going to make positive that this records is up to date and correct so for this instance i assume we’re going to do air merchandise so for instance what i can do is air merchandise investor
relations is what i am going to seem for right here and you can commonly discover investor family members web page on nearly each and every agency out there so i normally simply stop up googling it to make certain that i get to the proper spot um so let’s go beforehand and dig via this
here so we’re on the investor family members web page of air merchandise which is an industrial employer they promote a lot of gases it is simply one that i am invested into it is very giant it is like a 50 billion greenback enterprise um you comprehend i would not choose to speak about small organizations on this channel because
i do not choose to affect the rate of them or some thing bizarre um so let’s go in advance and see if we can locate these uh reviews so we can go click on up on submitting cut down reviews um and for full disclosure i already stated this i assume however i do personal a little bit of air product
stock so absolutely this is no longer any kind of like advice to purchase the inventory or some thing alongside these traces um so we are going to see all these extraordinary reviews right here in 8k it truly is going to be that quarterly document that we prefer to take a seem to be at
but let’s go beforehand and definitely appear at an annual file it is going to provide us a higher higher photo of the organisation however usually even though you are going to desire to go for the most current whether or not this is an 8k or a 10k whichever one is most latest they simply pronounced their quarterly income february 4th
so let’s go and genuinely simply seem at their annual document even though for 2021 and it is a pdf so right here we are 134 pages let’s go in advance and begin simply peeling returned some layers right here and see what we can locate and we are going to get started
with this all proper so we can simply see some of the fundamentals right here you be aware of searching at their commercial enterprise proper what do they do they may provide us a fantastic uh like appreciation of this they’re in industrial gases uh essentially all through the world america’s europe center east africa world uh i recognize they have a lot
of operations in china as nicely so we will study thru this seem at some of their monetary highlights right here so we can see that they’re very properly diverse in the course of the world this can be top and horrific the suitable issue about this is that you comprehend without a doubt skill that if one
country’s operations have issues uh the relaxation of the different operations during the world can optimistically uh assist that corporation like air merchandise to sort of uh remain sustainable and and you comprehend continue to be alive um the draw back of this is you recognize change wars wars in general
other troubles you recognize matters taking place with like russia and ukraine proper now there can be a lot of matters that may want to quit up hurting a world enterprise as nicely so there is each uh positives and negatives to some thing like that um so let’s seem to be at some of these like important
metrics right here and we are going to have some greater particular ones later on all through uh as we go thru this 134 pages right here however some of the fundamentals right here that that we prefer to truly be conscious of um is that most of these uh reviews are going
to be in uh like sure matters so hundreds of thousands of greenbacks is what this is said in um some monetary statements it will be one-of-a-kind they will be in lots of bucks alternatively of tens of millions of greenbacks so make certain you study this due to the fact in any other case you are going to seem to be at these numbers right here and say what the hell is going on i do not apprehend like
did this agency make ten thousand bucks this 12 months um so no they in reality made 10 billion bucks due to the fact it is 10 zero million greenbacks k so that comes out to about 10.3 billion greenbacks uh in income that air merchandise had in 2021 so
one of the matters that we usually appear at right here is searching for boom in matters like income i assume it is relatively easy you choose to see increase in income usually however it is now not going to be the solely photograph that we desire that we’re going to desire to seem at here
now one aspect that is sincerely vital right here when inspecting monetary statements and searching over an annual record is earlier than you make investments into a employer i truly trust you want to study each and every single phrase in these files due to the fact every now and then there may be going to be simply one
sentence in there that completely offers you the ick on a enterprise actually and i’ve had this appear earlier than the place i would omit one sentence in a record and i would pass over that sentence and then unexpectedly weeks later after i had already
invested into the enterprise i got here lower back and i realized i ignored that sentence and it absolutely modified my standpoint on the organization we are going to discuss greater about that later however you truly do have to examine and apprehend the entirety in these reports to make certain that it is a corporation that you favor to make investments into so we will talk
actually about all these distinct matters later on in the course of this file right here so we are going to discuss about you understand earnings earnings some of these different matters uh simply a terminology for you to comprehend uh gaap stands for normally everyday accounting standards so this is going
to be following alongside with positive protocols and matters that they have to do to make sure that accounting is you be aware of widespread amongst uh specific groups and industries so that we do not have some large like enron trouble like what passed off earlier than um so let’s go through
here uh we can ignore over some of this due to the fact uh we are going to discuss about extra of this later however you can seem to be at quarter to quarter income when you are searching at some thing like this the one aspect i will warn you on is i have a tendency to seem at matters like annual growth
instead of quarterly increase due to the fact a lot of agencies are going to be type of cyclical or seasonal um so for instance a lot of companies will have a lot extra sales in quarter 4 like round christmas and then a lot fewer
sales in like quarter one you be aware of january february march we see that a lot specifically with retail groups like macy’s for instance they’re going to promote a lot extra all through the vacation season than they will at some point of the summer season so i do not constantly like to examine quarters to every different i like to compare
years to every different even though perhaps you comprehend searching at like internet profits margins are going to be quite useful to do that so we will discuss about all of this um later on all through due to the fact it is going to go into greater element there however let’s simply appear over a couple matters here
right so we have matters like adjusted running margin what does this suggest um so what we’re searching at right here is uh these income had been 10.3 billion bucks uh 2020 8.8 billion bucks so it has grown over the path of a year
and we can seem at their running margin which is about 22 percentage um and you you recognize thing in a couple of different matters and nonetheless they’re really their their working margin is 22 it is down uh from 2020 which used to be 24.9
so a limit in running margin tends to be no longer a very correct issue we desire to see these margins growing generally until there may be some different matters uh that you understand we have not accounted for um searching at matters like salary per share this is going to simply take what we
just noticed right here and simply put it into a per share foundation uh we will speak greater about that later as properly uh some different phrases right here that you may prefer to recognize return on capital employed truly how right is this business enterprise at uh making cash on their investments let’s say they invest
into like a new undertaking and they’re pumping money into it how right are they at returning that cash and making greater cash from the cash that the agency invests um so it really is an essential metric as nicely to recognize um now this is the place we get into some really
interesting stuff um we’re gonna appear at matters like uh the the board participants the ceo the entirety else uh alongside these traces you do not wanna omit over this however simply analyzing via this right here k so you understand they have a best earnings
per share boom this is usually going to be vital as nicely eleven compound annual increase price this is what cagr stands for compound annual boom price however you comprehend if we get a little bit extra precise right here we can sincerely notice
that for instance um in 2021 they had an eight percentage boom and in 2020 they had a two percentage increase however if you go lower back to say like 2015 2016 2017 they had double-digit increase you recognize they had 18 boom in 2018 12 boom in 2017 these
days they’re getting two to eight percentage profits per share of increase so it appears like boom may be slowing down a little bit it really is simply some thing that you comprehend i seen proper right here proper off the bat as we’re going via this so you understand clearly we have to discern out why is that occurring there may be gonna
be a lot of questions that come up as you analyze a inventory um and so you understand like going thru this i am going to be writing down these questions why is their revenue per share now not developing as speedy as what it used to be a few years in the past is that an industry-wide trouble are they dropping a moat are they probably are there different opponents using up
prices we want to get to the backside of that and discern out why they’re incomes unique boom it is nonetheless developing which is true however it is now not developing as quickly as what it as soon as was once so let’s parent out why that befell and i am going to be writing down all these questions as you go via write down all these questions
i would say in all likelihood i will spend you recognize 20 to 30 hours analyzing thru these statements till i get to the backside of each query that i would possibly have you truely have to be meticulous with this um so you be aware of they’re going to simply speak about a bunch of matters for sure you prefer to study this if you are considering
investing into a corporation um searching at some of their massive tasks proper 4 and a 1/2 billion greenback smooth electricity complicated in louisiana uh 12 billion greenback mission in i consider this is saudi arabia and then you understand canada so
they are genuinely international there um now let’s appear at board of administrators do not bypass over this section many humans omit over this ok you have to like semi stalk some of these uh human beings ok that that sounded awful do not do not actually
stalk them however what i suggest is that you want to go and lookup every one of the humans who are on the board and additionally the govt officers and apprehend what’s their heritage what have they finished earlier than have they grown different companies earlier than did they get kicked out of different companies due to the fact they had issues or they
weren’t precise um and additionally you understand seem to be over different matters as nicely like i do not prefer this to sound like aegis or some thing however you recognize seem at uh how historical is the ceo is the ceo do you suppose they’re going to retire quickly if the ceo is 102 years historic this should create some
uncertainty for the enterprise you understand like if they’re over one hundred years ancient that ought to be a trouble like hello you understand statistically they may no longer stay you recognize some other 5 years if they’re 102. so you want to take these matters into consideration and now not pass by over learning the government officers and
the humans who are on the board who quit up making the largest choices for the agency um so safely you ship me i can simply inform you this that he is clearly he is been with the organization for at least 5 years now and he is clearly accomplished a lot for turning round the employer um like i stated i’ve been investing this
company for a whilst so um ok so now we’re virtually getting into the the uh the place we are right here structure 10k this is the place the assertion genuinely starts offevolved so these first 14 pages have been simply like a bunch of fluff now we’re getting into the real meat potatoes right here so the most vital stuff that we’re
going to do as we go via this is we’re going to seem at 4 key monetary statements without a doubt three key monetary statements it is going to be the earnings assertion the stability sheet and the declaration of money flows k so we’re going to go beforehand and scroll
down to these now as we go via this earlier than we get to that we will see different matters like for example you understand hazard elements you want to recognize chance elements barring a doubt what are the chance elements what are the conceivable issues um you recognize is this company
susceptible to inflation uh should they have issues with change wars like what are the largest dangers for this enterprise each uh assertion that i’ve study from agencies they usually have this in their file is going to be chance factors
so truly i am constantly questioning about danger proper criminal court cases most publicly traded businesses a lot of them are concerned in court cases nearly each yr they’re simply large agencies it occurs so uh study via that you understand attempt to get a study on that and assume about uh what’s the conceivable that you
know the business enterprise loses a lawsuit and has to pay out lots of tens of millions of greenbacks it takes place and it can negatively have an effect on the inventory of the organisation so study thru these see what’s going on what kind of complaints are they in or who are they suing additionally they can get a large money windfall as nicely if they sue
somebody else k so uh those are that is simply like the define there uh forward-looking statements we can simply form of brush thru this actual speedy you comprehend see the matters that they’re excited for uh what they assume you comprehend they’re searching ahead to uh in the future um however you
know like i stated make certain you examine each and every single line right here due to the fact these are going to be very very vital k so we’re scrolling thru right here and i trust that the economic statements the most vital phase are round like web page forty five or so so we’re going to simply variety of breeze via this here
and we’re going to study about you be aware of what they do right here the industrial gases commercial enterprise you virtually have to apprehend the whole lot i imply absolutely uh to the factor the place you can stroll into the company’s headquarters and discuss with all people and recognize what they’re announcing you be aware of so that you are not
totally clueless on what you comprehend blue hydrogen brown hydrogen black hydrogen you want to apprehend all of these exclusive matters like if you are reading a enterprise like this proper so uh let’s simply proceed going on thru right here what are the important merchandise liquid bulk package
on-site gases how does that function um you recognize how are they promoting these merchandise like hydrogen oxygen nitrogen proper how are they like getting helium what are their their margins the whole thing else alongside these strains searching at worldwide operations okay
so let’s simply breeze via this right here environmental law this is one of the truly the dangers right here for the business enterprise is that you comprehend due to the fact they are in industrials they have to bounce via a lot of hoops and for instance possibly the epa will say you be aware of we’re shifting the intention submit and now you want to do this sure element or you want to do
this now and this ought to negatively have an effect on the organisation of course it is proper for you be aware of the earth so i actually respect that however if you had been thinking about investing into a enterprise like this you understand you absolutely want to seem to be at that so studying via right here you comprehend 20 zero employees
safety compensation seasonality their commercial enterprise is no longer difficulty to seasonal fluctuations uh to any fabric extent this is actually correct to see so in reality possibly we can seem a little bit extra quarter to quarter increase that may want to be distinctly applicable um inventories clients right
for instance right here there is no single purchaser that debts for extra than 10 of their consolidated revenues i continually appear for this due to the fact i’ve considered it earlier than uh there are businesses like there is one like nathan’s well-known hot
dogs um uh they’re definitely tiny cap um however like they have like a large client that like makes up most of their income and so if that purchaser drops them all of sudden that business enterprise may want to be screwed so i constantly seem for organizations that have no single patron that money owed for greater than 10 of their
revenues that way if that client walks and they locate a new character to work with or agency to work with this enterprise would not get screwed so i continually like to see that uh authorities contracts they in reality have a ton of authorities contracts um
and simply searching over their uh govt workplace officers as properly uh their age you recognize like what they’ve carried out in the previous all very necessary ok threat elements examine thru this needless to say covid some different troubles that they may have um you understand simply sincerely examine via all of these however let’s really begin getting down to the monetary statements
because that is the section it truly is most vital k so we skipped via a couple of matters they talked about pension and some different matters that we desire to be conscious of um however we bypass down to the consolidated profits declaration this is one of the most vital archives that you can seem at right here um and so i will strive to go thru every one
of these traces and give an explanation for them to you and the significance of these however what i recommend doing uh due to the fact you desire to recognize this this is genuinely like taking the blood strain of a business enterprise and you understand like doing what the medical doctor does to make certain that you are healthful you comprehend searching at like your
your coronary heart charge and the whole lot else like this is the place you surely study about the fitness of a organisation is in these three economic statements the earnings announcement the stability sheet and the announcement of money flows we additionally have the shareholders fairness we are going to speak about that in a minute um so uh the
consolidated profits declaration of path is in thousands and thousands of greenbacks as properly um so uh income income have grown they exhibit us three years right here 2021 2020 2019 income have grown uh in 2021 drastically uh appears like about like one and a half
billion bucks income grew over the previous 12 months however that is now not usually going to be simply the photo that we prefer to seem to be at of direction we choose to see income developing however you be aware of greater importantly i would argue is that we favor to see earnings developing as properly on these income due to the fact if you make two instances extra cash however you cease up dropping cash you understand because
you’re spending so a whole lot greater to gather clients or for your product then you recognize is it virtually really worth it getting greater income you understand it’s an necessary query there so the price of income have multiplied uh as nicely so you comprehend alongside with income the fee of income has has accelerated as well
we have different matters facility closure 23 million bucks promoting an administrative 200 or sorry 828 million greenbacks lookup and improvement they sunk ninety three million bucks into that i truely suppose it is simply essential i like when i see groups pouring cash again into r
d uh to create new merchandise to create new you be aware of matters as nicely it is simply going to be in reality vital there and we have some different matters as properly in right here however surely what this comes out to when we take the income and then we subtract some of these extraordinary things
we’ll see that our working profits is about 2.281 billion greenbacks and this is going to provide us a higher photo compared to income so we can see you recognize let’s examine our running profits this 12 months in contrast to final yr in contrast to the 12 months earlier than that and it appears like working earnings uh from the backyard is
it appears like it is developing so it is excellent to see there so as you go thru these uh if if there is some thing that you do not recognize uh then sincerely your first-rate guess is simply gonna be a rapid google search for instance fairness associates earnings if you do not be aware of what that is you simply go smash the keyboard
real rapid and simply google it and discern out what that is however you do want to recognize every one of these traces right here as you go thru due to the fact there ought to be some thing that you do not recognize and it ought to definitely throw off your view of the corporation in reality i nearly invested into a business enterprise final week i used to be very shut to investing
into it and i was once analyzing over the monetary statements and i determined some thing in there that i realized definitely skewed the numbers due to the fact they had been counting ppp mortgage uh forgiveness from the authorities they have been counting that as profits on their profits statement
um and they have been counting as like five million greenbacks of earnings um however you be aware of like that that skewed the numbers and they have been counting authorities cash from covid as profits and it was once it used to be absolutely messed up the numbers and abruptly i realized the agency actually
wasn’t that worthwhile anymore uh as soon as i was once capable to dissect that and discern out what used to be going on there and i am simply blissful that i did that due to the fact in any other case i would have invested into a agency that wasn’t in reality making that a whole lot cash um so you recognize going thru right here uh we have profits uh and then we can
start to subtract matters uh there may be some thing referred to as ebitda e b i t d a ebitda and so it is going to be uh profits earlier than uh activity taxes depreciation amortization um so what this is gonna be
is you be aware of we can begin to subtract some of these matters like for instance profits from persevering with operations earlier than taxes then we appear at taxes we have to subtract 462 million bucks in taxes uh some different matters as nicely like
discontinued operations if you promote off sure components of the commercial enterprise like they bought off their chemical enterprise a whilst in the past they may have to uh subtract some of these matters as properly if they’ve misplaced some earnings there and some different matters as nicely to provide us
the complete internet profits for our merchandise which comes out to about 2.1 billion bucks on the yr um evaluate that to remaining yr and you comprehend their internet profits is developing which is clearly amazing to see so their income are developing and additionally their internet profits is developing these are each lovely metrics and it is probably
i would assume to be mirrored in the inventory rate um if you understand we see that developing so 2.1 billion bucks in internet profits then they will simply destroy down actually what we simply discovered there however on a per share groundwork as properly if it really is something
that you favor to seem at and recognize i have a tendency to definitely you understand center of attention on these numbers even though so that is the earnings assertion all proper so now we’re speakme about stability sheets this is my favored aspect to appear at and so what we have right here is a basic
formula we have property equal liabilities plus shareholders fairness this is every other aspect that you will study in a very like entry-level accounting classification so what we have right here we have 2021 versus 2020 and so let’s go via every one of
these strains right here as properly you may see a routine issue you may see matters like cutting-edge property or contemporary liabilities and non-current belongings and the fundamentals of this except going into too plenty element is that modern-day belongings or liabilities are going to be
things that are very an awful lot close to time period or tremendously liquid so you be aware of matters like money or inventories or pay as you go charges non permanent investments and then non-current will be matters that you recognize you cannot genuinely liquidate effortlessly or you can not it is difficult to put like a fee on them specially that you should promote um
and so like you be aware of for instance like plant and tools or goodwill goodwill is if truth be told uh like simply the identify of the agency and some different things alongside these traces and like like simply yeah so um let’s take a seem at this right here so
cash and money gadgets in the stability sheet on the organisation and like i stated uh belongings will have to stability out with liabilities and fairness so let’s go thru these strains right here so 4.468 billion bucks in money uh their money is down from closing yr we want to
figure out why that is the case you comprehend this may want to be regarding however you understand it would not have to be viewed proper off the bat we want to simply determine out why has money declined and have they made up for it someplace else on this stability sheet due to the fact you be aware of possibly they have much less money however possibly they have no extra stock and
so they simply form of shifted some property round we want to parent that out um non permanent investments the non permanent investments are up about 200 million bucks over the direction of the 12 months and their change receivables are up about appears like about you be aware of nearly 200 million greenbacks about a hundred and eighty million
dollars over the previous yr as properly and their inventories are up about uh appears like you be aware of nearly uh 50 million bucks as nicely and their pay as you go charges um are down a little bit there um and then their other
receivables and contemporary property are up so basic um their complete modern-day belongings are down through about you be aware of simply quitting like numbers in my head right here are down about 300 million bucks uh in contemporary belongings over the route of a yr so now not always like a big crimson flag however it is honestly some thing that you know
we favor to simply hold an eye on and make certain that they are not bleeding out money someplace and we are going to study greater about that in the subsequent economic declaration which is the declaration of money flows to see like the place that money is clearly going to and flowing to um and so
now let’s seem at some of these belongings that are no longer modern um so funding in internet property and advances to fairness associates that has long past up about uh you recognize appears like about 200 and a hundred 220 million bucks um plant and
equipment this has long gone up a lot it is long gone up about like 1.3 billion greenbacks am i doing this math proper yeah it appears like it is bought about 1.3 billion bucks so that is pretty a bit and you can see proper right here that you be aware of air merchandise they have 13.2 billion bucks of value
in their gear and in their flowers they have large big flowers down in texas and some different locations and over in china all over the world they have huge flowers in germany and some different locations and so these are well worth a lot of cash now how do they price these it really is a total different query for a complete nother
day that you can dig into and determine out how they put a valuation on those flora and gear however average you comprehend k it’s appropriate to see they have thirteen billion greenbacks in in that this is it truly is fantastically wonderful simply uh intangible property uh this may want to be any miscellaneous intangible
assets so i am no longer certain what this like what the unique unique ones may want to be this ought to be like all sorts of random matters like like vans or some thing bizarre that does not in shape into plant and gear or some thing alongside these strains um and then we have some different ones as
well rent receivables different non-current belongings so ordinary their non-current property 18.4 billion greenbacks in contrast to ultimate 12 months uh 16.4 billion bucks so this is up about two billion so average genuinely the complete belongings for air merchandise has
increased uh a bit you be aware of appears like like 1.7 billion greenbacks uh over the path of the yr and that is what i like to see so you be aware of you can seem to be at contemporary property however at the quit of the day you choose to seem to be at standard property as properly to see if it is growing or lowering and if
it’s reducing why is it reducing we want to get to the backside of that do they have a lot of debt we are going to determine that out in the next phase right here and if i am shifting too shortly i do make an apology however you be aware of there may be simply so a great deal to cowl right here uh and like i stated your excellent wager is going to be studying some
accounting books or some deep monetary evaluation books to get a full grasp of this however the one of the most vital matters on this stability sheet right here is searching at whole belongings are they developing or are they declining um and you be aware of like different matters for instance like are they promoting off their
equipment does not seem to be like it they’re constructing up extra gear it is exact you comprehend it is appropriate to see um k so now let’s speak about liabilities and fairness so keep in mind belongings equals liabilities plus fairness k and so cutting-edge liabilities and then we
have lengthy time period you recognize liabilities complete liabilities um so contemporary liabilities argue the ones that are particularly close to time period right here so we have money owed payable uh this is 2.2 billion bucks this has long gone up now this is the kind of factor that we do not like to see
increasing too a lot um due to the fact these are going to be your money owed right here proper your cutting-edge liabilities matters that you owe so we desire to see property growing however we do not favor to see liabilities growing too plenty we favor to see nearly these going down and it is no longer you recognize like
all of this of path like there is so many exclusive elements you have to take into account that you cannot simply mainly say that some thing is terrible like this proper right here we can seem and see that ok their liabilities right here have long gone up for debts payable that would not always imply that it is horrific every now and then groups will deliver on more
debt to finance their operations think about if you should borrow a billion bucks at a two percentage hobby charge uh and then take that cash that you borrowed and return 15 due to the fact you invested into a
new assignment that ends up making greater cash so businesses like need to use debt and there is a positive stage of debt that it looks to be like a protected margin for organizations um and in reality if a enterprise does not have many liabilities at all and they’re no longer the use of any kind of leverage
that’s nearly variety of a flip off as nicely due to the fact you comprehend the business enterprise would possibly now not be the usage of their property true and they need to be the usage of some debt some degree of debt to get a higher boom fee um so persevering with on right here you know
income taxes brief time period borrowings and all of this comes out to 440 484 billion bucks is their contemporary component of long-term debt um so typical you comprehend their cutting-edge liabilities have expanded over the previous yr their long-term debt
has reduced over the previous yr it is best to see um and then so simply sort of searching over this right here you recognize uh proper now their non-current liabilities which is like their long-term stuff has long gone down and their complete liabilities have long gone it appears like they’ve long past up about
50 million bucks over the path of a yr so simply searching at this right here we see belongings have expanded um you understand pretty a bit over a billion bucks and their liabilities have solely accelerated about 50 million bucks so that indicates that the organization is noticeably healthful from my viewpoint and of direction you be aware of we prefer to peel returned extra layers there but
that’s simply we’re doing a speedy and soiled evaluation right here and now we’re searching at the shareholders fairness um and so we can see how many shares are there there are 249 million shares of the organisation and so this wide variety can actually
fluctuate uh businesses can do share buybacks um they can you recognize do matters the place they will basically purchase again shares decrease the quantity of shares in the pool uh which essentially skill you personal extra of the organisation um and you understand it is it is normal like a lot of shareholders
do like that um however let’s see some of the matters right here uh that we have uh however at the cease of the day it comes out the place uh let’s say ok complete fairness 14 million bucks ultimate yr it was once 12.4 million bucks the shareholders i am certain are very completely satisfied about that um however what you are going to be aware right here is that
liabilities and fairness once once more 26.8 billion greenbacks it averages out with the whole belongings these numbers have to be the equal this is why it’s a stability sheet it has to stability k so 26.8 billion greenbacks in belongings 26.8 billion greenbacks in liabilities and fairness so
that is the stability sheet uh now let’s speak about the money waft declaration uh and this is going to assist you get a higher photograph of when we simply seemed at the stability sheet and we simply regarded at the earnings assertion this is going to assist us get a higher image of you understand what’s going on inside the company
where’s this money definitely flowing to where’s the cash flowing to and so this is the place we’re going to get that image there so we have our internet profits for air merchandise about 2.1 billion greenbacks discontinued operations as soon as once more the
parentheses are going to be essentially subtracting from positive matters so we misplaced about 70 million bucks from discontinued operations and then we have some different matters depreciation 1.3 billion bucks how plenty are we depreciating once in a while groups will do unique matters where
they’ll depreciate belongings at a quicker price or they will do some different unique matters like accounting receives very very bizarre very complicated there is a lot of special routes you can take so you do prefer to apprehend that uh as nicely i i simply i love accounting i am bizarre um but
it’s it is truely some thing that you ought to take up a ardour for if you desire to sincerely be a respectable investor so deferred earnings taxes deferred ability simply pushing off taxes ninety four million bucks um you understand now and again that can show up for a range of reasons
usually simply due to the fact they can facility closure 23 million bucks we’re subtracting matters like you be aware of the reap on a sale of belongings and investments share based totally compensation non-current rent receivables uh you be aware of simply go via every one of these apprehend uh
these you understand change receivables inventories uh payables and gathered liabilities um and you be aware of experience free to take breaks as properly at some stage in due to the fact you recognize this takes a lot of time to completely recognize so now let’s take a seem to be at uh for instance like investing things to do proper and we
can see the place cash was once flowing for investing things to do we simply seemed at working things to do up right here in this complete section here proper these had been all running things to do now we have uh investing things to do so for instance we had 2.468 billion greenbacks flowing into
additions to flowers and gear long-term deposits on these acquisitions uh 10 million bucks proper we had different matters as nicely proceeds from the sale of property and investments purchases of investments 2.1 billion greenbacks they’ve
been pouring a lot of cash into that proceeds from investments then uh so there is money flowing in from the investments that we have made and the ones that we are making now so there is you comprehend greater cash flowing out there comprehensible i like to see businesses investing lower back into the commercial enterprise i might like to see them beginning new tasks i assume that is without a doubt necessary to
continue increase and you understand make positive that that corporation without a doubt nonetheless has a moat and that their rivals do not creep up on them too rapidly and then financing things to do as properly so long-term debt repayments on long-term debt and then right here you see this big
number uh 1.2 billion bucks this appears like this is going to be the dividends i accept as true with i desire they had these blue traces like the blue and white line so we ought to line up the quantity except you understand w so yeah so uh dividends paid to shareholders 1.2 billion bucks uh i
love shares that pay dividends i imply they pay out 1.2 billion bucks to their shareholders each and every yr giving returned in reality money to humans who personal this employer i suppose it is exceptional i simply love to see them um i suppose proper now the company’s paying out like a two and a 1/2 percentage dividend um and you recognize of path as i stated previously this is not
like an inducement to purchase this inventory it may want to virtually go down it is simply um a corporation that you comprehend we’re examining right here these days and at the quit of the day after studying 134 pages you may figure out you recognize what i’ve study all this however i am nonetheless now not satisfied and i do not favor to
invest into it um and you comprehend that takes place to me a lot i would say likely after doing a deep dive into you understand agencies i would possibly solely make investments into perhaps one out of each seven or eight agencies that i will definitely do a deep dive on um and and this is ok you know
um however uh simply form of like filtering thru the relaxation of these right here some of these can be rather self-explanatory and you would possibly see one-of-a-kind uh numbers on right here or or unique uh like descriptions uh primarily based on you understand the file that you are searching at so
companies would possibly use some barely exclusive terminology as nicely then we have the statements of fairness this is going to be the fourth economic assertion um you be aware of this one it is i do not prefer to say that it does not count number as tons however it is one that you
probably are going to spend a little bit much less time on it is simply essentially searching at uh when we seem at shareholders fairness this is essentially who owns the agency and you recognize how how is that performing and some different matters like dividends that are being paid out to them share based totally compensation for like
executives for an instance and some different essential matters in there however these are the most necessary matters that i seem to be at when i am examining a inventory and of direction you be aware of we’re solely midway thru this runs web page seventy four out of 134 however all of this is is is going to be
different for each and every enterprise uh mainly so i do not desire to bore you with some of these matters studying about earnings taxes um and non permanent investments and savings losses uh for this unique agency due to the fact you comprehend like i stated it is gonna .