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Researching Stocks With IBD Digital

Disclosure: IBD has provided ValueWalk a free subscription to IBD Digital for this review.

Investor’s Business Daily is filled with a variety of premium tools to help investors as they research individual stocks. In fact, IBD Digital contains many features which can help you see not only the basics about each stock you want to look at, but also details on related stocks that you may want to consider.

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Image source: Wikimedia Commons

Using the Stock Checkup feature in IBD Digital

One of the easiest ways to research stocks using IBD Digital is via the Stock Checkup feature, which enables you to search for any stock by its ticker symbol. Logging into IBD Digital for the first time may seem a bit overwhelming because of the sheer number of tools that become available to you when signing up. It’s pretty easy to get lost in all of the features, but that’s certainly a good thing when it comes to researching stocks!

To get a basic report on any stock using its ticker symbol, just look for “Stock Checkup” under the Research dropdown after logging into IBD Digital. If you try to use Stock Checkup without logging into IBD Digital, IBD will ask you to subscribe or offer a free or discounted trial, which gets you not only the Stock Checkup feature, but a host of other tools to help as you research stocks.

IBD Digital makes it easy to research stocks through the Stock Checkup feature. All you have to do is inter the ticker symbol you want to look at, and it takes you right to a page that’s filled with technical information and the company’s fundamentals.

Here’s what happened when I researched FB in IBD Digital

To take this research function in IBD Digital out for a spin, I decided to try it out on Wall Street darling Facebook. After entering the ticker symbol into Stock Checkup, it showed me IBD’s “Composite Rating” for Facebook, which is 96 at the time of this writing. This Composite Rating takes into account the other proprietary “SmartSelect” ratings offered through IBD Digital, which are EPS, Relative Strength, SMR (sales, margin and ROE), ACC/DIS (accumulation/ distribution).

A handy popup inside IBD Digital explains that the Composite Rating is also a percentage. For example, Facebook’s 96 rating means that it has outperformed 96% of “all other stocks in terms of its combined SmartSelect Ratings.” Next to the Composite rating, there’s also a green dot which states that Facebook has passed… something. It’s a bit unclear what that’s supposed to indicate.

IBD Digital also indicates that the general market is in a “confirmed uptrend, while IBD is “neutral” on the Internet-Content Group, which Facebook is a part of. IBD Digital ranks the group at 47 out of 197 industry groups and assigns an A- grade on the group’s relative strength rating.

As far as Facebook’s fundamental performance, IBD Digital rates its earnings per share at 98. The only place the company fails as far as its fundamentals, according to IBD, is in the number of quarters in which earnings per share accelerated. The company is currently at zero, having broken the years-long acceleration trend it previously enjoyed. Still, earnings estimates are being revised upward, and Facebook managed to beat estimates in the last quarter by about 25%.

Spotting “smart money” stock purchases

IBD Digital gives Facebook an A in terms of its sales, margin, and ROE and a B+ in accumulation and distribution. The Accumulation/ Distribution Rating looks at “the relative degree of institutional buying (accumulation) and selling (distribution) in a particular stock over the last 13 weeks,” which is certainly a handy tool for do-it-yourself investors who want to see which stocks the so-called “smart money” is buying.

Clearly, IBD is just as positive as most of the rest of Wall Street when it come to Facebook, although one thing in the Stock Checkup report that caught my eye was related to that acceleration and distribution rating. The Up/Down Volume ratio stood at 1.1, and IBD Digital explains that a ratio higher than 1 implies that there’s positive demand for the stock. Clearly, this year has been a difficult one for Facebook, but analysts tend to croon so much over the company that investors will keep buying it, although it seems demand is starting to dry up, based on IBD’s Up/Down Volume ratio.

The report also indicated a 2% change in funds owning Facebook stock, so a few funds that didn’t own it at the end of the fourth quarter apparently purchased shares during the first quarter. It seems likely that Facebook stock finally started to come down enough during the first quarter to attract funds that previously saw the valuation as too rich. Analysts were constantly advising investors to buy Facebook stock on the pullback, so it’s no surprise that some funds did just that. According to IBD Digital, funds have been increasing their ownership of Facebook for the last eight quarters, which is quite a streak, considering that for most of that time, the stock was skyrocketing steadily higher.

Facebook versus the rest of the group

In addition to the Composite Rating shown at the top of the Stock Checkup page, IBD Digital also shows a list comparing Facebook to the top four stocks in its group. For example, GrubHub and Twitter both ranked above Facebook in the Composite Rating, while Autohome, GrubHub and Weibo are ahead on EPS. Facebook stock ranks 31st in relative strength rating, which is also quite telling as far as its slowing momentum goes. Facebook is at the top of the heap on sales, margin and ROE, but it’s in 15th place for accumulation/ distribution.

In general, I did find IBD Digital’s Stock Checkup page to be somewhat glitchy, as sometimes the little bubbles that pop up to show more information on each of the ratings were blank. Sometimes one of the bubbles would pop up and then refuse to go away, which was a problem because it kept me from seeing what was on the page underneath. Still, these are relatively minor problems that are easily overlooked or worked around. The quality of the tool itself appears to be quite high.

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