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The penalties for both
failure to file
and failure to pay
are more severe than the
penalty for failure to pay only,
SO...,
EVEN if you can't pay,
FILE the return anyway.

The information contained in this website provided in good faith. It is intended for general use only and should not substitute for specific advice on any given tax issue. It is recommended that you contact me or another tax professional before implementing any of the suggestions or information contained herein to ensure that it is appropriate to both your circumstances and needs. Pursuant to requirements related to practice before the Internal Revenue Service, any tax advice contained in this website or communication from me (including any attachments) is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another person any tax-related matter.

Investing Basics:
Picking the Right Stocks

We have witnessed such volatile activity in the stock market over the past two years that the old stock selection rules are not always applicable. Seasoned investors and new investors alike want a sure-fire way to pick the winners.

Well, no one can offer any guarantees, but smart investors do have certain characteristics they associate with a winning stock.

A crucial key is that the stock should meet certain criteria. There are good stocks that don’t fit the mold, but historically, the stocks with the biggest gains shared most, if not all, of these features:

	Strong balance sheet Look for companies with a low debt-to-equity ratio. In recessionary times, debt-laden companies may not stay afloat.
	Low price-to-earnings ratio P/E ratios are usually industry-driven, so make sure you compare similar companies. Low P/E ratio may mean an increased rate of return on your investment.
	Good management A strong management team and a leadership position in their industry are ear-marks of a good company. Look for a history of steady growth to assess staying power.
	Book value A stock priced lower than its book value provides extra assurance that your investment will not go sour.
	Good dividends A strong dividend history with regular increases adds to a stock's desirability. A healthy income stream can make the wait for growth returns more pleasant - and it helps prop up a stock's price in a falling market.

	Undervalued assets Company assets such as real estate and mineral holdings may be worth dramatically more than the balance sheet and stock price indicate. Companies with undervalued assets may be tempting to conglomerates in these days of merger mania.
	Broad ownership base A stock that is held by relatively few investors is much more likely to be subjected to dramatic drops if a major holder decides to bail out.
	Basic industries Shy away from faddish industries, notorious for meteoric rise and fall. When timing is the most crucial element in an investment's return, it becomes more akin to gambling than investing.
	Strong cash flow Healthy cash flow will help a company weather economic downturns. It might also make the company a takeover target since takeover debt can be paid off with the surplus dollars.
	Unusually low price A low price when compared to the stock's average historical price could indicate a bargain if the drop is due to market forces rather than changes in the company.

Though there is no magic way to select winners, the hallmarks of a good stock value are somewhat ascertainable. Good investing requires legwork and attention to detail, but that’s a small price to pay for a healthy portfolio.

If you have questions or would like assistance with your investment concerns, contact my office via phone or email. I'm here to help.

KATHLEEN R "BILLIE" LOVETT
CERTIFIED PUBLIC ACCOUNTANT
P. O. BOX 642
REEDSVILLE, WV 26547
PHONE: 304-864-6618
FAX: 304-864-3744