Mind the Flex

Using Adobe Flex 3 for Analyzing Stocks

Flex is very suitable for applications that require handling of tabular data as it provides by default functionality, which would be very difficult to achieve in HTML. We have been hearing business requirements about all kind of extreme sorting and dragging-dropping for years but thanks to Flex we can now start to take these requirements seriously. The following article is an example how Flex could be used as a business intelligence tool for analyzing stocks.

At some point in life you start to question whether the paycheck really has to be the only income you'll ever have and aren't there any alternatives except playing regularly lottery. One possible way out could be the stock market. As we were looking for information about investing in stocks, we found an excellent book The Neatest Little Guide to Stock Market Investing written by Jason Kelly. The greatness of this book lies in its ability to explain investing in stocks to people who have absolutely no prior knowledge without scaring them off. Usually these kind of books turn into a thing in itself after a couple of chapters and start to compete with each other in explaining simple things in a very sophisticated way. This book supports a rather "you belong where you want to be" attitude but it's at the same time not too overly optimistic about the revenues. The book describes the tools and principles which should make losing money on stock market much more difficult.

The reason why we are writing about this book here is that it contains several strategies how to invest in stocks. The book itself contains some tables to create your own stock portfolio and these tables can be downloaded also from the Jason Kelly's blog. As we are living in the 21st century and all kind of progress is welcome, we thought that these tables could be as well be programmed in Flex to reduce the technical work of users. The example application is built on the recommendations of the book's author and is based on Medium Midcap strategy (the historical performance of this strategy is displayed here).

The main thing the application does, is finding the best company based on the criterias described in the book. It highlights them and then finds the most suitable company to invest to. There are some shortcomings related to this application. As it's just a prototype, it is not linked to real data. We couldn't find a suitable data feed and therefore the application is prefilled with some example data to give a feeling how a real application would look like. Also there could or should be the possibility to give different weights to different characteristics as some of them are more important than the others. Once again, it's just a prototype and an example how Flex could be used in real life. If somebody wants to use this prototype for investing real money then it will be on his/her own risk. Click below to see the demo:

This program strategy (based on Kelly's book) Company Basics Current Price and 52-Week High/Low: A lower price is better. Limiting choise between $5 and $50 ($5 to $20 for small caps). Market Capitalization: Looking for smaller companies. See the Moningstar capitalization table (Kelly 2008:38). Daily Dollar Volume: Small caps should have low volume. Sales: Bigger is better. Company Health Net Profit Margin: Looking for high net profit margin (minimum is 10%). Cash: Bigger is better. Total Dept: Looking for little or no dept. Stock Health Sales per Share: Bigger is better (you should list companies that have increasing sales per share). Cash Flow per Share: Bigger is better (you should list companies that have positive and increasing cash flow per share). Earnings per Share: Bigger is better (you should list companies that have positive and increasing earnings per share). Dividend Yields: Should be high for large companies. Returm per Equity: Looking for high return on equity. Should be 20% or higher. Insider Buys/Ownership: Should be marked as "YES". Past Performance EPS Rank: For growth investors, look for high EPS (should be 80 or higher). RPS Rank: For growth investors, look for high RPS (should be 85 or higher). 5 year Sales: Bigger is better (minimum 10% for small companies, otherwise 15%). 5 year Price: Bigger is better (minimum 10% for large, 15% for medium and 20% for small companies). Project Performance Sales and Earnings: Bigger is better. Projected Stock High/Low: Bigger is better. Rankings Value Line timeless/safety: Timeless should be ranked 1 or 2. S&P STARS fair value: Should be 4 or 5. Stock Ratios Current Price-to-Earnings: Looking for a low P/E. Average Price-to-Earnings: Looking for a low P/E. Should be higher than the current P/E. Price-to-Sales: Looking for a low Price-to-Sales. Price-to-Book: Looking for a low Price-to-Book. Current Ratio: Bigger is better. Should be at least 0.5 Quick Ratio: Bigger is better. Min and Max: Bigger is better.