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Lincoln - Stock Doctor
Features
* Financial Health
* Star Stocks
* Nine Golden Rules
* Stock filter
* Valuations
* Portfolio manager
* Charting
* Alerts & watchlists
* Additional features

Lincoln Nine Golden Rules

Stock Doctor's investment framework is encapsulated in Lincoln's Nine Golden Rules. This disciplined framework
combines fundamental and qualitative factors to help you isolate quality, undervalued stocks from potential
disasters before you invest.
Nine Golden Rules
Stock Doctor automatically assesses every ASX listed company against Lincoln's Nine Golden Rules criteria and
displays results on an easy to interpret summary screen.
1. Financial Health
Financial Health is our first and most important golden rule.
Lincoln's unique Financial Health model assesses key accounting ratios relating to each company's
profitability, cashflow, liabilities and assets. It then determines a Financial Health rating commensurate
with the business risk of the company so you can quickly identify stocks that warrant further consideration
and eliminate those that don't.
We recommend investors only consider stocks with consistently Strong or Satisfactory Financial Health ratings.
2. Management assessment
Management quality and leadership capabilities are important factors when assessing the ability of a company
to fulfil its financial and strategic objectives.

Return on assets (ROA) demonstrates a management team's ability to extract revenue growth from the company's
asset base and create shareholder wealth. Earnings per share (EPS) growth measures management's ability to
consistently grow the companies earnings and profit. For non-financial sector stocks, Lincoln's ROA benchmark
is eight per cent per annum on an improving trend and earnings per share (EPS) growth of more than eight per
cent for at least 18 months.
For bank and insurance stocks our benchmark is Return on Equity (ROE) of 14 per cent per annum on an improving
trend and EPS growth of at least 12 per cent per annum (with at least eight per cent per annum growth in the
past 18 months).
With Stock Doctor you can quickly and easily assess management quality using the company summary screen, stock
filter and ROA/ROE and EPS graph tools.
3. Share price value
Identifying fundamentally superior companies trading at a discount to their true value maximises your capital
growth potential. Stock Doctor includes two forward-looking valuation methods:
Star Stocks: Our analysts calculate a Lincoln Valuation for each Star Stock using forecast earnings. A Star
Stock is undervalued if its current price is below the Lincoln valuation.
Non-Star Stocks: The consensus target provides an indication of the anticipated stock price 12 months in
advance for all ASX listed companies where consensus data is available.
In addition to consensus price forecasts, traditional price earnings (PE) and price earnings growth (PEG)
ratios are used to assess share price value. A PE ratio of less than the industry average indicates the stock
is undervalued. Where the PE is greater than the industry average, Stock Doctor uses the PEG ratio to
determine whether earnings growth justifies the premium price. Lincoln's benchmark is a PEG ratio of less than
one.
4. Liquidity/volume
When buying stocks it's important to remember that you may need to sell them at some point in the future.
Stock Doctor uses the Average Daily Dollar Traded data to assess liquidity. We recommend the average daily
dollars traded is at least five times your exposure level. For example, if you are considering an investment
of $10,000 in a company, look for average daily dollars traded of at least $50,000.
5. Share price sentiment
Always focus on stocks with a positive share price trend. Never buy when share prices are historically
volatile, underperforming its sector, indices or peers or trending downwards. Stock Doctor includes a range of
charting tools to easily gauge share price sentiment.
6. Market capitalisation
Traditionally larger stocks are less volatile than their smaller counterparts. Size is an important
consideration when matching your portfolio holdings to your risk appetite. For this reason Stock Doctor Star
Stocks must have a market capitalisation of above $100 million.
For investors with higher risk appetites Stock Doctor provides the flexibility to screen for financially
healthy, fundamentally superior small capitalisation stocks that meet the eight other golden rules.
7. Company activities
As a shareholder you are a part owner of the business. So it's important you understand the business you are
investing in and the factors driving future earnings growth and profitability. These include:
* principal activities

* competitive environment
* industry trends and developments
* economic and structural issues
Stock Doctor combines information on every ASX listed company's operations and principal activities with
analyst comments, company director statements and extensive financial data to help you understand the business
behind the stock.
8. News and announcements
Company news and announcements can immediately impact stock prices positively and negatively. Stock Doctor
keeps you abreast of company ASX announcements so you can monitor potential performance impacts between
reporting periods.
9. Follow all Golden Rules
Stock Doctor's nine golden rules provide a clear indication of a company's Financial Health, management
quality, share price value, liquidity sentiment, size and future prospects. With this proven academic
framework and holistic view you can make an informed and confident assessment of each company's long-term
growth prospects.
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