[Some famous investor said this phrase, you know who? I hope you know :)]
- Cheap Valuation - P/B, P/E, discount to NAV etc
- Business Economic Moats - high barrier to entry, unique product(s) or service(s) such that the company will always be needed and still be around for decades
- Growth - sustainable consistent growth
- Profitability - ROE, ROA, increasing FCF NOT net profit only, net profit margin
- Financial Health (net cash or little debt, unless company got high earning powers to offset)- see gearing, debt to equity, quick/current ratio, interest coverage ratio
- Dividend - 2-3% p.a. with <40% dividend payout ratio. History of increasing dividend payout ratio over the years as business grow
- Risks - think of negative aspects of business
- Management assessment - compensation(executive pay is linked to company performances), character, experience
Extracted and updated the above bullet points from my ex-page. If you manage to find good companies, please feel free to share :)
4 comments:
There are many good companies out there, but they may not make good investments.
Hi MW,
Anything else I should take note of when looking for good companies for good investments?
Hope to learn from you more. :)
Hi OT83,
Yep! Cash flows.
Hi mw,
yes! fcf. that's why I wrote.
Profitability - ROE, ROA, increasing FCF NOT net profit only, net profit margin
profit may not mean that money flow into company.
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