The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market

look at the most recent cyclical peak, make a judgment whether the next peak is likely to be lower or higher than the last one, and calculate a P/E based on the current price relative to what you think earnings per share will be at the next peak.

Analyze the industry’s competitive structure. How do firms in this industry compete with one another?

small growth stocks are the worst-returning equity category over the long haul.

One item that can be altered is a firm’s depreciation expense.

Here’s what you need to know for practical purposes: As interest rates increase, so will discount rates. As a firm’s risk level increases, so will its discount rate.

As a very general rule, a current ratio of 1.5 or more means the firm should be able to meet operating needs without much trouble.

Be highly skeptical of firms for which goodwill makes up a sizable portion of their book value. The P/B may be low, but the bulk of the B could disappear in a hurry if…

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firms with ROEs that look too good to be true because they’re usually just that. ROEs above 40 percent or so are often meaningless because they’ve probably been distorted by the firm’s financial structure. Firms that have been recently spun off from parent firms, companies that have bought back many of their shares, and companies that have taken ma

Do Executives Get Perks Paid for by the Company that They Should Really Be Paying for Themselves? It’s a sure sign of corporate excess when execs get country club memberships and other frippery paid for by shareholders.