Hey guys! I'm gonna walk you through the Leeds analysis process which my team and I used to find the highest quality low priced investments which we profile to our subscribers. This is a video on Trading Penny Stocks for Beginners. I'm gonna walk you through it in a simple way with websites that you can use and I'll show you exactly what we look for in ways in which we eliminate stocks we don't want to invest in. So check it out! Ok guys, I'm gonna walk you through the Leeds Analysis process. You can even apply some of this to a stock pick you have in mind right now. Think of a company you want to look into. Now, if this is your first time here please subscribe to the channel follow along with us because this is just going to be the first episode of many where we talk about the Leed's Analysis process. So let's get right into it, I'll walk you through one of the things that we look at with Leeds analysis. Especially with penny stocks you need to look at this almost first this is the exact first thing that we do when we're looking into penny stocks after we do a full screening to get rid of all the garbage companies. We will walk you through how to do that to an upcoming video, but for now what you want to do with penny stocks the most important things to go right away and look at the balance sheet and see how much do they own versus how much do they owe.
You know I'm trying to use use easier language just so people who are new investors can learn a lot and sort of follow along. What is basically you're looking for are assets versus their liabilities. So how much do they own and how much do they owe? Here's what you do we're going to go to a site that everybody can use and we're going to walk you through it and will use a company which was one of the stocks that was picked for the subscribers at PeterLeeds.com but you can use any stock that you have in mind and apply this process to it. So this is just episode 1, step 1, of Leeds Analysis and there's probably going to be a hundred and some odd steps but this is the first part, ok, and this will actually be one of the most important ones it's going to make a big difference to you quickly.
So, go to yahoo.com and go down on the left hand side there should be an option to choose finance. That's going to take you over to Yahoo Finance. From there you can enter the ticker symbol of the stock that you're interested in and the form field not in the search field but over to the left more there is a form field where you can put the ticker symbol. In our example here we're going to use Hecla Mining(HL) which is a stock we recently selected for our subscribers and when you put that in and you click go or submit it's going to take you to some information all about the company. Now keep in mind again I'll tell you that you can do this through market watch or through your broker.
This is just one that I know that everybody can have access to if you have an internet connection and a computer and time to look into it. Alright so now when you scroll down ignore all this other stuff we'll get into that with the Leeds Analysis process at another date but for now just scroll down and on the left near the bottom you're gonna see all the financial statements, the income statement, the balance sheet and cash flow statement. Now ignore everything you don't need to know anything, just follow along with me here. You click on the balance sheet that's going to pull up information that the company's reporting publicly about how much they have and how much they owe!
You want to get as granular as you can so you go up here and you select instead of annual data you select quarterly data so that's going to give you the data from every three-month period which they reported. Now, when you scroll down the information that you are going to see there is current assets, long-term assets, and if you scroll down a bit more there is going to be current liabilities, and long-term total liabilities. Now you will notice in the corner, for the example were using, it says all numbers in the thousands that isn't necessarily the case for every stock you look at but in this particular one all numbers are in thousands. So, if you see something that looks like it says 242,000 that actually says 242 million, keep that in mind, ok, because also Hecla mining was an example of a company with great solid financial position and so that actually comes into play in terms of what they have in terms of assets. So you'll see here and the current assets. What current means is that these are assets which could be used or could come into play within the next twelve months. So things which are more liquid such as stock market investments, or cash or even outstanding invoices which is expected to be paid within next 30 or 60 days. This is all money coming in is already in play which can be used in the short term. If you want to look at total assets that's gonna be bringing in other assets that are not something that you would consider could be used within the next year. It would be more like things that for example: an assembly manufacturing plant that's not something that you're going to sell so you can pay off some hydro bills and pay the cleaning lady. This is stuff that if you were to sell it will be a longer process, the money is not available in the short term.
So a company can have a lot of assets but you also want to look at how much of those assets are more liquid which is the current assets compared to the total assets. None of this really matters until you compare it to the liability portion of the balance sheet. Current liabilities are those liabilities which need to be paid within the next year usually these are liabilities which are due now or going to be due within months. So for example, outstanding invoices if there's like a bill for the heat for the office, if there is some supplies that they bought. This is all stuff which needs to be paid now and that's why it's so important to look at the current assets to make sure they have enough funds to cover what they owe currently. Then you want to look at the big picture you look at the total liabilities a lot of companies will have a massive liability position especially when you're talking about Penny Stocks. You want to make sure that the total asset position is greater than the total liability position if they are about equal, that's fine but you don't wanna company where its about equal. You want a company solid financial shape!
You want them to have you know a huge amount of assets and a very small amount of liabilities that gives them a lot of flexibility to issue more debt or take on more debts that kind of thing so they are more able to adapt to different situations and take advantage of opportunities as they arise. So you want to look at a company with greater assets than their liabilities in terms of long-term and for sure you want a company that has greater current assets to current liabilities.
Otherwise you could get into a situation where you're looking at a cash crunch. So this isn't a way only to see if company is in good financial shape, when it comes to Leeds analysis and especially with penny stocks because most of them are horrible companies. It's a way of eliminating companies which were a little bit worried about. If the company is to close in terms of assets to liabilities we don't want anything to do with them because there are literally thousands and thousands of other options out there so why bother with this company that is potentially gonna face a cash crunch that sort of thing. How do you eat an elephant-- one bite at a time!! So that's bite number one. We're gonna have lots more stuff about Leeds Analysis and how you can look into a stock yourself. Ideally you guys are to learn how to do this yourself because you shouldn't be relying on anybody else, not even ME!!
To find out how to invest in a stock find or find out which stocks are higher quality. I want you guys to learn how to do this so that you're self sufficient with this stuff. Or if I make a stock pick that you can turn around and go you know what we don't agree with what you team is putting out there and we disagree for this reason and that reason! I think that would be amazing, I would love to see that and I really am open to all sides of any position or argument. So again I mean this video started to run a little long and we've got hundreds more than probably all going to run a little long you guys are awesome, thank you so much for listening I really do hope this helps on Trading Penny Stocks for Beginners.