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Strategies & Market Trends : A.I.M. PIC List (Perverse Investment Candidates)
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To: LemonHead who wrote (102)1/2/2002 7:09:22 AM
From: OldAIMGuy  Read Replies (1) of 127
 
Hi Keith, Thanks for the analysis on HAL. I've used the NASDAQ Guru site before, but not to the depth you just explained.

It would appear that HAL is near the mark even on the FAIL criteria, with the exception of Debt/Equity. These capital intensive companies sometimes have that problem. The next thing you can do is start to analyze the debt structure. If the company has a strong balance sheet, then chances are they've been able to borrow and restructure debt in an efficient manner. It there's large debt which is at high interest it is indicative of a soft balance sheet.

You may want to look at how well they've managed to earn on those borrowed dollars. If they are good at earning money on borrowings, then large debt isn't a bad problem. Like Mr. Phelps said in his book, "Determine the difference between companies run by good Economics vs ones run by EGOnomics." If they're borrowing money and not earning at a rate at least equal to their interest payments, then it's EGOnomics. Here I think Return on Investment would be a good measure.

Thanks for the detailed report.

Do you think we should have a separate thread just for AIM stock pick ideas?

Best regards, Tom
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