I like to go where the cash is. So, I Fast Tracked Google (GOOG), Apple (AAPL) and Microsoft (MSFT).
Fast Track results: Each stock failed four categories. Staying with the discipline of my three-category rule, I’m not going further with these ideas.
Key Points:
- These companies are cash machines, with strong and growing free cash flow, lots of cash on their balance sheets, and no long-term debt. While substantial, cash balances at Microsoft have been declining.
- Google reported earnings that were slightly below Street estimates in two of the last four quarters. Street estimates have been trending lower at Google and Apple. Microsoft’s earnings have not disappointed and estimates have been stable.
- Valuation is a mixed picture at Apple and Microsoft. Google’s stock passed Fast Track’s two valuation measures.
- Managements at all three companies have been selling stock at the same time that the Street loves these stocks. I want to see just the opposite. There are a total of 97 ratings on all three stocks, of which 81% are buy recommendations – not much room for any disappointment.
The Company Stock Risk Profile Fast Track is a research tool for quickly and easily screening stocks for potential ideas. Fast Track is comprised of 10 key categories incorporating fundamentals, valuation and how management and the Street feel about the stock. I like to see a stock fail no more than three categories before putting the stock through the complete 50-category Company Stock Risk Profile research process. Most important, whatever screening tool you choose to use, always thoroughly research the stocks that pass your screen before buying.
