Return 14 Times Larger
The expansion of stockholder’s equity represents true expansion of capital for shareholders. CNQ’s strong equity growth enabled CNQ stock to out perform all the other investments that don't have equity expansion. CNQ stock produced returns that were 14 times larger than the returns for gold, 5-Year Treasury bonds, home costs and T-Bills demonstrating the better returns supplied by firms with high equity growth rates.
The examples that follow depict corporations with high equity expansion rates that were tiny and micro cap companies at the beginning of the test period. These companies represent a broad cross section of industries including broking services, ceramics manufacturing, tool making, electrical products producing and energy systems.
The average return of these stocks over the testing time was 1,370% demonstrating the ability of high value growers to form wealth for shareholders. There is nothing micro about the high equity expansion rates and the potential for profits in the examples I am about to show you! Be ready to be impressed!
Downloading Equity Expansion Rates
A corporation's stockholder’s equity information can simply be downloaded from websites like Google Finance or ycharts.com. Let’s go thru the steps to download equity expansion rates from Google Finance. Sign in to http://www.google.com/finance and type in the symbol of the company that you would like to inspect. This will display quote info for the chosen stock. I typed in ‘CLH ‘ the symbol for Clean Harbors Inc a tiny cap stock and received the quote info displayed below. On the left side of the quote display there's a column of additional information available for the chosen stock. Under Summary select ‘Financials ‘ .and this can display a company's stockholder equity information at the base of the balance sheet page. I included the balance sheet information for Apple Inc symbol AAPL on the following page.
Figuring out Annual Stockholder’s Equity Growth
For the period ending 25-Sep-04 Apple’s stockholder’s equity or natural price was 5,076,000 which is circled above (all numbers in thousands). 2 years after on 30-Sep-06 Apple’s stockholder’s equity was 9,984,000. If we subtract the 5,076,000 starting figure from the 9,984,000 ending figure the net result's a 4,908,000 gain in stockholder’s equity for the two year period. If we divide the gain of 4,908,000 by the beginning stockholder’s equity figure 5,076,000 the result's a 96.6% percentage gain in stockholder’s equity. If we then divide the 96.6% total gain by 2 (years) the result's a once a year percentage gain in stockholder’s equity of 48%. Retained revenues is the largest part of Apple’s stock holder’s equity. Most of the increase in Apple’s stockholder’s equity was the result of the expansion in kept takings which grew at a 55% yearly rate over the same 2 year period.
Retained takings growth reflects a company's ability to grow its takings and to retain those revenues. Stockholder’s equity takes into account a corporation's ability to retain its takings and a corporation's debt level as debt decreases stockholder’s equity. So a firm's stockholder’s equity growth is the best overall measurement of the capability of a company to grow its earnings and to keep its takings. A company with a raised level of stockholder’s equity expansion provides economic value to its stockholders as the true worth or intrinsic value of a company grows.
Steps for Calculating Apple’s Yearly Stockholder’s Equity Growth:
1. Sign in to Yahoo Finance and click ‘Balance Sheet ‘ to obtain a company's stock holder’s equity information. Apple’s current net worth is 9,984,000 and two year’s gone its net worth was 5,076,000.
2. Subtract the net worth from 2 years back (5,076,000) from the current net worth (9,984,000) to get the two year increase in net worth which would be 4,908,000 in this example.
3. Divide the 2 year increase in net worth (4,908,000) by the beginning net worth from two years back (5,076,000) and multiply by. 100 to get the two year total percentage increase in net worth which would be 96.6% in this example.
4. Divide the 2 year pc rise in net worth by 2 to get the once a year percentage raise in net worth which would be 48% in this example.
5. If the annual percentage increase in net worth is 10% or greater then the stock qualifies as a Wealth Building Stock.