Why Use a Watchlist?
Stock Sage may discover a fundamentally qualified company near its 52-week low. The investor then researches the company, but may not be ready to make any decision. That is where a watchlist becomes useful.
A watchlist allows the investor to continue following a company without requiring immediate action.
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Friday Stock Sage Scan
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Discover Company
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Research Company
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Interesting, but Continue Monitoring
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Watchlist
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Review as Information and Price Change
An investor may want to monitor a company because:
- The company appears fundamentally interesting.
- The investor wants to investigate it further.
- The price is not currently attractive enough for the investor.
- The investor wants to monitor valuation.
- The investor wants to follow changing business conditions.
- The investor wants to compare the company with other opportunities.
The Two Sage Trading Suite Watchlists
Personal Watchlist
The Personal Watchlist belongs to the individual customer. The customer controls which stocks they want to follow and can manage the stocks on this list.
It can contain companies the customer wants to research further, monitor, compare with other companies, or revisit later.
Your Personal Watchlist reflects your own research interests.
Stock Sage Watchlist
The Stock Sage Watchlist is separate from the customer's Personal Watchlist. It is maintained by Stock Sage/company administration.
Customers can view and use it for research, but cannot add stocks, remove stocks, or change its company-managed contents.
The Stock Sage Watchlist is company-managed. Customers can research it, but they do not control its contents.
Why Keep the Watchlists Separate?
The two-watchlist structure serves two different purposes and lets customers maintain their own interests without changing the company-managed list.
Personal Watchlist
“What do I personally want to continue researching?”
Your research list. You manage it.
Stock Sage Watchlist
“What companies is Stock Sage/company administration currently maintaining on its research watchlist?”
Company-managed. You can view it but do not modify it.
What Happens After a Stock Is Added?
Watchlist research should continue over time because a company's situation can change.
- Stock price changes
- Earnings changes
- Valuation changes
- Profitability changes
- Balance-sheet changes
- Analyst expectations changing
- Company-specific developments
- Industry developments
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Add
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Monitor
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Research
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Review
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Keep Monitoring or Remove From Research List
A watchlist should not become a place where stocks are added and forgotten. Removing a company from a research watchlist is not the same as selling the stock, whether or not the investor owns it.
The Analyst 52-Week Estimate
Where available, the watchlists include an analyst 52-week estimate. It represents an analyst-based estimate of where the stock's price may be over approximately the coming 52 weeks.
The estimate is not:
- A guaranteed future price
- A promise
- A price the stock must reach
- A price ceiling
- A Stock Sage guarantee
- An instruction to buy or sell
Analysts can change estimates as new information becomes available, and different analysts may reach different conclusions.
Why Compare Current Price With the Analyst Estimate?
Suppose a stock was originally placed on a watchlist when there appeared to be a meaningful difference between its current price and the analyst 52-week estimate. As its price rises toward that estimate, the original research situation may change.
The investor may want to reevaluate:
- Current valuation
- Updated earnings
- Updated analyst expectations
- Current business conditions
- The reason the stock remains on the watchlist
This is where Watchlist Review becomes useful.
Watchlist Review
Watchlist Review helps identify stocks whose current situation may deserve reevaluation. One important review condition is the relationship between the current stock price and the analyst 52-week estimate.
Stocks that come within 20% of the analyst 52-week estimate are flagged in Watchlist Review for possible deletion/review.
The flag means: “This stock deserves a fresh look.” It does not mean: “Sell this stock.”
It also does not mean:
- The stock is automatically overvalued
- The stock cannot rise further
- The analyst estimate will be correct
- The stock must be removed
- The investor must take action
Understanding the 20% Review Rule
Pioneer Products (PNP) is a fictional company used only for this simplified educational example of the existing rule.
Before the Review Range
Analyst 52-week estimate: $100
Current stock price: $79
Difference: $21
The stock is still more than 20% below the $100 estimate.
Within the Review Range
Analyst 52-week estimate: $100
Current stock price: $82
The stock is now within 20% of the estimate. PNP can be flagged in Watchlist Review for possible deletion/review.
What should the user do?
Reevaluate the company. Ask whether valuation, earnings, the analyst estimate, or the business outlook has changed, and whether the company still deserves a place on the research watchlist. The flag is not an instruction to sell.
Why Flag for Possible Deletion?
A watchlist should remain useful. If a stock's price has moved substantially toward the analyst estimate, the original reason for continued monitoring may have changed. The stock may still deserve research, but it should not remain indefinitely without reevaluation.
Possible deletion asks: “Should this stock continue occupying a place on my research watchlist?”
It does not ask: “Should I sell shares I own?”
Analyst Estimates Can Change
Previous estimate
$100
Possible update
$115
Another possible update
$85
Analyst expectations may change because of:
- New earnings information
- Company guidance
- Industry developments
- Economic changes
- Changes in analyst assumptions
Users should consider the current estimate and current company information. An estimate is not more authoritative than the investor's own research.
Finding More Fundamentally Interesting Stocks Within the Watchlists
Both the Personal Watchlist and Stock Sage Watchlist include dropdown filters for:
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Stock Repurchase
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Current Assets > Current Liabilities
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Profit Margin
These dropdowns allow users to narrow or organize either watchlist based on additional fundamental characteristics. They do not create a recommendation.
Stock Repurchase Dropdown
A stock repurchase, also called a share buyback, occurs when a company purchases some of its outstanding shares. The dropdown allows users to identify or narrow watchlist companies based on applicable stock-repurchase information available in Sage Trading Suite.
Repurchases can reduce shares outstanding and provide useful information about capital allocation. A repurchase does not automatically mean the stock is undervalued, management is correct about value, the price will increase, or the company is fundamentally superior.
Use stock repurchase information as another research clue—not as a stand-alone buy signal.
Current Assets > Current Liabilities Dropdown
Current Assets generally represent assets expected to be converted into cash or used within the company's normal operating cycle. Current Liabilities generally represent obligations expected to be paid within that cycle.
The Current Assets > Current Liabilities dropdown helps users identify watchlist companies meeting that applicable condition and can provide context about short-term financial position.
The condition does not prove that the company has no debt, has no financial risk, is undervalued, or should be purchased.
Profit Margin Dropdown
Profit margin helps show how much of a company's revenue ultimately becomes profit. The dropdown allows users to narrow or organize watchlist companies based on applicable profit-margin information available in Sage Trading Suite.
Different industries can have very different normal margins. A higher margin does not automatically make one company a better investment. Consider the company's historical profitability, whether margins are improving or declining, its industry, and other fundamental information.
This lesson does not create a required profit-margin percentage.
Using the Three Filters Together
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Watchlist
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Stock Repurchase + Current Assets > Current Liabilities + Profit Margin
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Narrow Research
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Investigate Companies Further
The dropdowns do not produce an automatic winner. They help narrow either watchlist according to fundamental characteristics the user may want to investigate.
Filters help you ask more focused questions. They do not answer the investment question for you.
Example: Narrowing a Watchlist
Suppose a Personal Watchlist contains 12 fictional companies. The user wants to investigate companies with applicable stock-repurchase activity, Current Assets greater than Current Liabilities, and the selected Profit Margin criteria available in the interface.
The user applies the three dropdowns, and the list becomes smaller.
The remaining companies have not automatically become recommended investments. The dropdowns have simply created a more focused research list. The next step is to investigate those companies individually.
Personal Watchlist Example
Northstar Industries (NSI) is a fictional company used only for this educational example. An investor discovers NSI through Stock Sage. It passes Stock Sage's fundamental requirements, but the investor is not ready to make an investment decision and adds NSI to the Personal Watchlist.
- The investor monitors NSI.
- The investor reviews updated financial information.
- The investor watches valuation.
- The investor reviews the analyst 52-week estimate where available.
- The investor uses the fundamental dropdowns when appropriate.
Later, NSI moves within 20% of its analyst 52-week estimate. Watchlist Review flags NSI for possible deletion/review.
Stock Sage Watchlist Example
When a customer switches from the Personal Watchlist to the Stock Sage Watchlist, the customer can:
- Review the companies
- Research individual companies
- Use the available Stock Repurchase dropdown
- Use the Current Assets > Current Liabilities dropdown
- Use the Profit Margin dropdown
- Use the watchlist as an input for other supported Sage Trading Suite research tools where applicable
The customer cannot modify the company-managed contents of the Stock Sage Watchlist.
Watchlists and Options Sage
Options Sage can use the Personal Watchlist or Stock Sage Watchlist as a research universe where that functionality is available. This allows an investor to begin options research with companies already being monitored through Sage Trading Suite.
This lesson does not teach options strategies. A later lesson will show how Options Sage fits into the complete Sage Trading Suite workflow.
What Should Stay on a Watchlist?
A company may deserve to remain when the investor still has a reason to monitor or research it. Ask:
- Do I still want to research this company?
- Are the fundamentals still worth monitoring?
- Has valuation changed?
- Has the analyst estimate changed?
- Is the stock approaching the analyst estimate?
- Has the original reason for watching the company changed?
- Is this company still relevant to my research?
There is no benefit in maintaining a watchlist filled with companies the investor no longer intends to research.
A useful watchlist should have a reason behind every company on it.
What Should Watchlist Review Not Become?
Watchlist Review should not be interpreted as:
- A trading signal generator
- An automatic sell system
- A prediction system
- A guarantee that an analyst target will be reached
- A substitute for current research
Its purpose is to help users identify companies whose circumstances deserve another look.
A Repeatable Watchlist Routine
- 1Review the watchlist regularly.
- 2Ask why each company is still on it.
- 3Review updated fundamentals.
- 4Review current valuation.
- 5Check the analyst 52-week estimate where available.
- 6Pay attention to Watchlist Review flags.
- 7Use Stock Repurchase to narrow research where appropriate.
- 8Use Current Assets > Current Liabilities to add balance-sheet context.
- 9Use Profit Margin to add profitability context.
- 10Continue researching, keep monitoring, or remove companies that no longer belong on the research list.
Removing a company from a watchlist means removing it from that research list. It does not mean selling an investment.
The Watchlist Workflow
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Discover
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Research
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Add to Watchlist
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Monitor
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Use Fundamental Filters
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Review Analyst 52-Week Estimate
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Watchlist Review
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Reevaluate
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Continue Monitoring or Remove From Research List
The watchlist keeps the research process moving after the initial discovery.
Knowledge Check
Choose an answer for each question, then check your response.