It is entirely possible for individual investors to beat the stock market. It is not easy and may seem daunting, but by concentrating on your strengths you’ll find a way to consistently beat the market.

I noted these valuation tips three years ago, but didn’t record the source. I’ll add to these and alter them in future posts. For now I want to start consolidating my notes.

1. Learn to calculate cash and debt on a balance sheet. Good investments can have debt, but the more they have, the riskier the investment.
2. If you decide a company is a very good one, but they have a lot of debt, then you must learn to analyse the cash flow statement. Can the company support their debt? 
   If it has low debt, all you need to know is Cash from operations minus Capex (capital expenditures).
3. P/E ratio. It is good to be able to track this. Where cash flow can give us an immediate value within a range, the P/E ratio measure emotion. The two together make very reliable tools to gauge value.
4. Make notes on share dilution. All you have to do is note the basic share count and the diluted share count each quarter. Nothing else is really essential. It is nice to see it growing less than 3%.
5. Use Yahoo stats to note Thompson growth estimates for your company. [Pay particular attention to companies who have rising earnings estimates, i.e. analysts have recently increased estimated earnings. Likewise beware companies with falling estimates.]

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2. Telstra – Stock Market Returns Inverted
3. M2 Telecommunications Analysis and Valuation
4. Great Southern and Ospraie
5. Hunter Hall International Limited (HHL.AX) Analysis and Valuation
6. Biota Analysis and Valuation