Professionals in equity research departments nationwide have access to a suite of tools that most individual investors either won’t need or simply can’t afford. The cost of something like a Bloomberg Terminal would be so exorbitant that it would easily wipe out any investment gains it might help you make.
So how does an individual stock trader level the playing field when the firm on the other side of the trade has the best research that money can buy?
The answer, perhaps unsurprisingly, is to take advantage of the amazing free resources that you can find online. There are a lot out there, and it can be easy to get overwhelmed, so here are three of my favorites.
Best Free Investing Resource: Twitter
If you are not on Twitter, you need to sign up. And when you do, make sure to follow me! It is far and away my favorite free investing resource (I would gladly pay if required).
I will give just one example, but I could write a book on the benefits of Twitter.
I closely follow spin-offs, but BBX Capital (BBXIA) slipped under the radar. It was tiny and there were some corporate governance concerns and so I didn’t spend much time on it until I saw Neil Cataldi tweet this.
To summarize, you had a recent spin-off trading at 39% of the cash that it had on its balance sheet (with no debt). Better yet, the company has operating businesses and real estate that were/are worth even more.
I quickly recommended the name to my subscribers and then bought it myself. We are up about 99% in five months! Book value per share is 16 (the stock price is 6.30) so there is still some good upside remaining.
Thanks, Neil!
Best Free Investing Resource: Google Alerts
Google Alerts are great and totally free. You just need to have a Google email to use them.
To set them up, go to www.google.com/alerts.
In a nutshell, you can get a daily email that alerts you to certain keywords.
Some keywords that I monitor:
- Special dividend
- Stock spin-off
- Revenue pre-announcement
“Revenue pre-announcement” is a good one to use because – to state the obvious – it signals that things are going better than expected or worse than expected.
Usually, the market is slow to catch on. If a company reports a positive pre-announcement, its stock will trade up, but usually not by as much as it should.
Here’s an example.
On February 17, before the market opened, I got a Google Alert that a company called Stabilis Solutions (SLNG) had pre-announced positive revenue.
After reading the press release, I learned that Stabilis Solutions expected to generate Q4 revenue that is 170% higher than Q2 2020 revenue (the low point for the year). On a year-over-year basis, Q4 revenue is expected to be up at least 8%. It’s pretty impressive that an energy company is already back to peak revenue generation.
Meanwhile, the company’s valuation (1.4x revenue) seemed reasonable and there had been insider buying right around the current share price.
On the day of the pre-announcement, the stock jumped 3%; however, this was clearly an under-reaction. Fast forward to today and the stock has doubled!
Best Free Investing Resource: Koyfin
Koyfin is an amazing, FactSet-like resource that is completely free!
The company is venture backed so at some point I would expect it to start charging for certain features, but for now the company is focused on building a great resource.
Take advantage while it lasts!
My favorite feature with Koyfin is “Estimates Overview,” which enables you to see consensus estimates from sell-side analysts.
You can find consensus estimates using Yahoo Finance (another good free tool) but only on a limited basis.
Koyfin shows consensus expectations for Revenue, EBITDA, EBIT, and EPS. Further, its user interface is beautiful and intuitive.
I recommend checking it out.
What’s your favorite online research tool?