Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice. As always, please remember that I am an amateur investor, so please consult with your professional investment advisors prior to making any investment decisions based on information on this website.
Checking the mailbox once again today, I saw that I had a letter about Intuitive Surgical (ISRG). Art B. wrote:
Hi BobFirst of all, thank you Art for visiting and taking the time to write! I believe it is the discussion on this blog that makes it all worthwhile and maybe we all can learn a little from these inquiries.
I came across your web site today after seeing how well Intuitive Surgeries has done in terms of stock price. I realized that you posted an article on April 30, 2004 on this company, and I like yourself am an amateur investor and I was wondering if you could help direct me in the right direction, or at least offer some advice:
1. How did you come across ISRG back in April of 2004? It was nothing special as you said before you did a deeper analysis, but how did you initially come across this stock? Did someone mention it, did you read about it?
2. How does one spot companies such as these that are young, offer promising new products, but have not yet been discovered fully by analysts or mutual fund companies?
3. I could see that this stock was up and down over the past five years, but if someone had spotted them in 2001, they could have gotten in at a very low price, and then stuck for the ride. Again, how does one screen for such companies?
I look forward to your response.
First of all, I am not as smart as I look :). For I did not buy any ISRG stock for myself. I bought about 20 shares for my son in one of his accounts and he did well with it. My stock club also purchased some ISRG shares on my suggestion. However, you will not find any shares in my own trading portfolio.
Let's get back to your questions that you kindly numbered:
1) How did I come across ISRG?
answer: I found ISRG like I find all of my stocks. I start with the top % gainers each day (when I do look), and then look at the latest quarterly report screening for both positive earnings and revenue growth, followed by a Morningstar.com examination of the "5-Yr Restated" financials--I am looking for a fairly steady five year growth in earnings and revenue, positive free cash flow, a reasonable balance sheet with assets greater than liabilities, at a least current assets exceeding current liabilities. Finally, I take a look at "Key Statistics" on Yahoo for more detailed background information, and a "point & figure" chart from Stockcharts.com.
By the way, I posted Intuitive Surgical (ISRG) on Stock Picks on April 30, 2004 when it was trading at $16.35. ISRG closed today (7/27/05) a little more than a year later at $64.82, up $13.52 on the day (!) or 26.35% just today on the price. Since my post, the stock has appreciated $48.47 or 296.4%.
2) How does one spot companies such as these that are young, offering promising new products, but have not yet been discovered by analysts or mutual fund companies?
answer: I guess you could do the same thing that I do :). I don't think that I can discover anything before everyone else, but maybe we can find some stocks that will appreciate earlier than some other people. You have to realize that I literally have hundreds of stocks listed on this blog, and ISRG has happened to be a top performer. Others however, have panned out. So take my stock pick on that particular day with a grain of salt.
In my view, I am looking for stocks that show a consistency in earnings and revenue growth, and have something positive happening (like an earnings report) that causes them to make a large positive move that day.
3. This last question is a repeat: "How does one screen for such companies?". See the prior answer.
There is NO magic to successful investing. Just hard work, discipline, and observation of details. Try to build a portfolio of companies growing steadily, with good finances. When you make a mistake and the stock declines, sell it quickly. When it works out, do the opposite, sell it slowly.
Good-luck and again thanks for stopping by. I wish I were more brilliant or eloquent, but there is nothing mysterious about what I do. One investor once complained to me that all I was doing was "due diligence." Maybe we all need to do that a bit more thoroughly :).