Technically Speaking
Rent-A-Center is trading at levels not seen since 2001.
The R/R would seem to favor a long position, however, a company that has been falling for this long probably has a deteriorating business or some other deep seated issue.
Fundamentals
Here is a summary and some recent news items.
The question I would ask, is this a trade with a definite entry, stop, and exit or is this a core holding, hoping for a turnaround?
My checklist:
Should I buy?
* Is it trading at an important technical level that is obvious?
* Is the R/R in your favor?
* What is the likelihood this company will either go bankrupt or it's products or services become obsolete?
* How much debt do they have?
* If heavily indebted, how much is coming due in the next 3-5 years? Can they cover their debt payments based on reasonable analysis?
* Will their product or service become obsolete? This really is too hard to say, too many things looked obvious in hindsight, think Blackberry -0.80% -0.34% . However, I think it is constructive to think about, especially if you are planning to hold a stock for the long term.
Risk
* For individual securities, risk no more than 3% as a starting position. You can always add later.
* Write down a price level that you will consider liquidating all or part of the position.
* What is a reasonable price target?
Execution
* Write down the answers to the questions above and if you can answer yes to all of them, take the trade.
OVER THE LONG TERM, THE WAY TO WIN IS TO HOLD ONTO YOUR WINNERS, AND CUT YOUR LOSERS. IT IS AS SIMPLE AND AS HARD AS THAT.
As always, please leave any comments or questions.
Rent-A-Center is trading at levels not seen since 2001.
The R/R would seem to favor a long position, however, a company that has been falling for this long probably has a deteriorating business or some other deep seated issue.
Fundamentals
Here is a summary and some recent news items.
The question I would ask, is this a trade with a definite entry, stop, and exit or is this a core holding, hoping for a turnaround?
My checklist:
Should I buy?
* Is it trading at an important technical level that is obvious?
* Is the R/R in your favor?
* What is the likelihood this company will either go bankrupt or it's products or services become obsolete?
* How much debt do they have?
* If heavily indebted, how much is coming due in the next 3-5 years? Can they cover their debt payments based on reasonable analysis?
* Will their product or service become obsolete? This really is too hard to say, too many things looked obvious in hindsight, think Blackberry -0.80% -0.34% . However, I think it is constructive to think about, especially if you are planning to hold a stock for the long term.
Risk
* For individual securities, risk no more than 3% as a starting position. You can always add later.
* Write down a price level that you will consider liquidating all or part of the position.
* What is a reasonable price target?
Execution
* Write down the answers to the questions above and if you can answer yes to all of them, take the trade.
OVER THE LONG TERM, THE WAY TO WIN IS TO HOLD ONTO YOUR WINNERS, AND CUT YOUR LOSERS. IT IS AS SIMPLE AND AS HARD AS THAT.
As always, please leave any comments or questions.
