Equities Lab Charts Individual Stocks

Let’s take a look at the stock Sturm Ruger & Co using Equities Lab. In this case, we’ll look at a chart of the stock price versus the S&P 500.

image

Notice, in the chart below, that we support going back 25 years.  We also changed the chart, called a tear sheet, so you can visualize the fact that the stock is only 62% of its all time high (look on the right, midway down in the table). The blue line is a chart of all the defense stocks, of which Sturm Ruger is one. As you can see, Sturm Ruger and Co should be doing better, according to the performance of its industry.

image

We Can Chart Fundamentals

The question is: where and why did RGR do poorly?  Let’s chart earnings, revenue, and cash flow.  Notice that the operating cash flow (pink line) and the income (blue line) spent significant time going down from 1995 to about 2009.  The stock, meanwhile, went sideways.  The secular sideways trend happened because the company wasn’t earning any more money than it was last year; in most cases, it was actually less! Unsurprisingly, investors didn’t rush to buy more shares.  Look at the spike near the end of the chart.  Early in 2014, the stock reached an all time high, and operating cash flow went down for the next year, as did revenue and earnings.

You now know that RGR’s income is very volatile, and there’s little sustained growth; you can see what that will do for investors in the stock (hint: bad things).

We Can Chart an Industry, Sector, or Custom Metric

You want to know more: perhaps the stock wasn’t making more money because the sector is in decline.  Let’s find out. We can total up all the income across all companies in each sector, and plot that (pink line).  We will also do this for revenue (blue line) and cash flow (brown line).

The sector’s revenue kept increasing, along with income and cash flow, so that kills that theory. When we focus into the industry, we see that it still makes no difference.  The operating cash flow (blue), revenue (pink), and income (brown) are all going up.

Charting Computed Values

We can also look at RGR’s maximum drawdown. If you look down, you see we defined maximum drawdown (distance from the highest peak to the lowest valley) in our system for this example, to make it easy to follow.  Notice that RGR has spent substantial time far below its all time high.  The typical investor is not going to look with a horizon of more than five years, so you can use Equities Lab to model the that investor’s view of the stock’s profile.  Either way, it doesn’t look good for RGR.

Comparing Charts Adds Clarity

How does that compare to a volatile stock that had better performance?  Apple will serve as an example.

Here is Apple, plotted with its maximum drawdowns, both five year and rolling. Next up is the earnings plot.

Look!  The lines all move in the same direction!  Perhaps Apple went up year after year because its earnings went up year after year.  Notice that the early 2000s are the exception that prove the rule.


Earnings, cash flow, and revenue all meandered during this time, and so did the stock price.  When they started going up, so did Apple’s stock price.

Advanced Charting for Deep Insight

What have we learned?

  1. Apple has a very nice chart.
  2. Ruger’s chart is not so nice. It is in a good industry, and sector, and yet it does not perform as well as its sector.
  3. Earnings, Revenue, and cashflow correspond with the stock price.
  4. You can learn much about a stock by looking at its charts.
  5. Equities Lab can do a variety of useful charts.