Notes on the Book 'Firing Your Stock Analyst'

Harry Domash originally researched U.S. equities; however, the content is adapted for China’s A-share market. The information presented herein is solely a summary of the book’s content and does not constitute investment advice. Core Logic of the Book Full analytical sequence: initial stock screening → preliminary review to eliminate low-quality companies → in-depth item-by-item analysis → setting three-tier target price ranges (bullish, neutral, bearish) → defining clear buy and sell criteria. Companies failing the preliminary review are discarded outright—no further resources are allocated to in-depth research. Eleven Core Analytical Tools 1. Deconstructing Analyst Forecasts Do not take buy or overweight ratings at face value. Focus instead on consensus revenue and earnings forecasts, comparing each quarter’s actual financial results against market expectations. Stocks that consistently miss expectations by wide margins receive penalty points. In China’s A-share market, securities firms’ research reports tend overall toward optimism; therefore, pay close attention to trends in upward or downward revisions to forecasts—not the textual rating itself. 2. Valuation Analysis: Calculating Implied Growth Rate Apply P/E, P/S, and P/B ratios in two comparative dimensions: against the company’s own historical data, and against peers within the same industry. Implied growth rate: reverse-engineer the annual profit growth rate embedded in the current stock price—the growth rate the market has priced in. An excessively high implied growth rate signals that market expectations have become overextended, raising risk. For cyclical industries, avoid using single-year profits from peak or trough periods; instead, normalize profits. In the A-share market, use non-recurring profit–based valuation metrics as the priority; an implied growth rate exceeding 30% is considered high-risk. 3. Target Price Range Do not set a single target price. Instead, establish three tiers—bullish, neutral, and bearish—calculated by multiplying normalized EPS with appropriate valuation multiples. Given the A-share market’s pronounced volatility, price ranges should be set with appropriately wider bands. 4. Industry Analysis Assess industry growth rate, competitive landscape, and the company’s position within its industry—distinguishing genuine industrial growth from speculative theme-driven rallies. In the A-share context, additionally consider impacts stemming from industrial policy and regulatory developments. 5. Business Plan Scorecard Identify the sources of earnings growth: prioritize organic growth driven by core operations, and remain wary of earnings artificially inflated through continuous acquisitions. In the A-share market, closely examine goodwill as a percentage of net assets; high ratios trigger penalty points. 6. Management Assessment Evaluate dividend policies, share repurchases, equity dilution via new share issuances, executive compensation, and history of financial statement restatements. In the A-share context, also scrutinize major shareholders’ share reductions, share pledges, and related-party transactions. 7. Financial Health Analyze current ratio, quick ratio, and total debt; compare cash holdings against debt levels to identify solvency risks. In the A-share market, distinguish between operating liabilities and interest-bearing borrowings, and watch for the “high cash & high debt” anomaly. 8. Profitability Track gross margin, net margin, and ROE; observe three- to five-year trends in revenue and non-recurring net profit; verify alignment between operating cash flow and net profit. Strong net profit figures coupled with persistently weak operating cash flow constitute a major red flag.

German Stock Market Plunges; Stryker Rebounds

On Wednesday, May 13, the DAX 40 index closed sharply lower. Fading hopes for a U.S.–Iran peace agreement weakened market risk appetite. Meanwhile, Germany’s May ZEW Economic Sentiment Index unexpectedly improved—but remained in negative territory. Germany’s April inflation rate edged up slightly to 2.9%. European Central Bank policymaker Joachim Nagel stated that if an oil-price shock threatens to derail eurozone inflation expectations, the ECB must raise interest rates. Recently, former U.S. President Donald Trump announced he would give the EU until July 4 to approve a trade agreement with the United States, threatening to impose even higher tariffs if the EU fails to meet the deadline. Boosted by rising European demand, German exports unexpectedly increased in March. The United States remains Germany’s largest export destination—meaning tariff hikes would have significant repercussions. According to Deutsche Bank Research, although first-quarter earnings for DAX index constituents exceeded market expectations by 5%, they still declined 8% year-on-year. Automakers continued to be the primary drag on performance. The report also forecasts accelerated earnings growth in non-automotive sectors during the second half of the year.

Argus Lowers Target Price for Martin Marietta Materials

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Argus Research lowered its price target for Martin Marietta Materials to $520.00, while the stock trades at $490.53. The company is a major U.S. producer of construction aggregates.

Yahoo Finance UK

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International Flavors & Fragrances Inc. Given Consensus Recommendation of "Moderate Buy" by Analysts

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OFI Invest Asset Management Reduces Stake in International Flavors & Fragrances

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Douglas Lane & Associates LLC Sells 39,607 Shares of International Flavors & Fragrances Inc.