Fortune ran an article on Bob Olstein, an investment analyst who was particularly bullish at the time on several well-known stocks. He said the following indicators were the keys to his success: (1) a recent dramatic drop in the stock price, (2) company reports of positive free cash flow (net cash from operations minus capital expenditures), (3) conservative accounting methods, (4) a buildup in raw materials and partially completed inventory compared to finished inventory, (5) an increase in discretionary expenditures such as research and develop, (6) undervalued assets on the balance sheet, (7) little or no debt combined with a high return on assets, and (8) consistency between what the president’s letter said and what had actually happened over the past few years.
REQUIRED:
Explain how each of the eight items could provide a positive sign about a company.