Research (Investicniweb.cz)
World markets  |  October 17, 2012 12:54:21

10 tips, stock in a downturn: Look for smaller companies with high yields



Extreme global central bank intervention distorts the market as an indicator of future prices and increasing uncertainty not only in financial markets but also in the real economy. In the future, we expect slow economic growth because financial repression will continue. In this environment, the small specialized firms fare better than large companies. / Source: SAXO BANK / left: 0px; top: 0px; position: absolute; "allowtransparency =" true ">

In this environment, the global economy is slowing for large companies a natural brake on their growth. Small companies on the other hand can grow more easily, which we saw during the financial crisis, when many smaller companies managed to grow in a deep recession.

The key to success when investing in companies with small market capitalization is the correct choice of the investment horizon and the ability to recognize successful companies from the average ones. When making decisions, it is important to choose a fast growing company, which achieve a good return on capital employed. In addition to the foregoing, the following companies have to satisfy the following three quality requirements:

First The company must create for its customers meaningful value.

Second The company must be resistant.

Third A company must be able to use a sufficient portion of earned value to create profits.

Based on these criteria, we selected the 10 equities of small companies, which we expect rapid growth in the environment of subdued economy. An example of such a company is NIC dedicated to providing services in the field of e-government (government support and local governments to use the internet). Due to cuts in public spending in the U.S. is the company able to show growth despite very weak fundamentals in the U.S. economy, because its services help reduce public spending.

10 tips on growth equity firm

T12M PM - profit margin for the last 12 months, CF / NI - the proportion of cash flow and net income, ROIC - return on invested capital, P / E 12E - estimate of the share price and net income per share in 2012, P / E 13E - estimate of the share price and net income per share in 2013

DEVELOPMENT OF GLOBAL EQUITY MARKETS MAKES SENSE

Global equity markets since the beginning of the summer reinforcing. We believe, though, that the scope for further strengthening is limited, and we believe that there could be a correction.The spread between the current and future P / E ratio reported in the major geographic regions shows that the expected nominal growth in earnings per share is around 12-16%, which can only happen if China and the euro zone will start to appreciate again, will be introduced massive share buy-back programs and manages to keep control of unit labor costs. For something like this probably will not in 2013, and we therefore believe that there will be a price adjustment to income, as the game enters slow growth of real earnings (earnings per share EPS adjusted for redemption), which investors will return to earth.

What is the current valuation of shares by region and risks that may affect investors can be found on the web Investment

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