What are the initial factors that make you like a company?
Is it the sales growth? And you decide to dig deeper only after sales growth qualifies some standards?
I am too much of a newbie. Please bear with me.
What are the initial factors that make you like a company?
Is it the sales growth? And you decide to dig deeper only after sales growth qualifies some standards?
I am too much of a newbie. Please bear with me.
â˘Sales growth > 15-18%
â˘Predictability/Visibility - 5-10 years
â˘Debt/Equity - zero to 0.2
â˘Moat - Perceivable
â˘ROCE > 20%
â˘High OPM
Love at first sight if it has a negative working capital
How many years of backtracking needed for the above figures?
Its stock specific. Longer the better.
But future predictability/visibility/sustainability of the numbers matters more.
1.Predictability/Visibility
Please explain what is meant by Predictability/Visibility. And how to gather the data for a particular company.
2.Moat - Again, how to gather information for a co.
Investing books can help you to gain knowledge on it.
Pat Dorseyâs -The Five Rules for Successful Stock Investing
Peter Lynchâs- One up on wall street
For more reading ,pls check VP book suggestions.
Predictability/Visibility
âA2Z Maintenance bags orders of Rs 3,300 crore.â This info tells the reader that the company is more or less guaranteed to earn money in near future.
Questions.
3. Moat & Visibility - There is no need to worry about visibility once a rock solid moat has been spotted.A moat guarantees future earnings(and hence visibility).If there is a solid moat,visibility comes free along with it. Please correct me if I am wrong.
And thank you Lynchfan for those books
StockChecklist.xlsx (16.3 KB)
I am trying to use this. This is summarized from
âWarren Buffett and the Interpretation of Financial Statementsâ by David Clark and Mary Buffett.
I am still a long way from practicing as captured here. Would welcome suggestion from others.
Professor on negative working capital - Float
Please consider the following excerpt from One up on wall street
There are 5 ways to increase earnings
Query
What is meant by âexpand into new marketsâ?(a) Is it selling the already existing products in new territories?
(b)Or is it selling Newly developed products in old as well as new territories?
Thanks
Take the example of Vgaurd industries.
A) The main market for vguard is the southern 4 states. For itâ new markets â means the northern states. When it sells its existing products in north India, by setting up new distributors, its earnings increases.
B) Vguard sells electrical goods like stabilizers, water heaters, wires & cables. When it manufactures and sells new products like kitchen appliances, using its existing distribution network, that too increases the earnings.
So both are applicable.correct?
Yes, both of them are applicable.
I forgot to ask you in my earlier post.
Out of several kinds of moats(I guess Peter Lynch terms moats as âNichesâ), the most powerful one is production of a âvaluableâ product and that competitors are not in a position to manufacture the same. This is the âwidest of the wide moatsâ.
Am I correct?
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Finally I have summarized the entire idea of analysis:
1. A company has to make lots of money. This is achieved by:
2. It has got to accumulate that earned money. This is achieved by minimizing expenses, which in turn are of two types-normal/regular and capital.
3. To achieve the above two, it must have the necessities for its survival (abundant cash)
I think I have got the entire idea in proper place.What do you have to say?
Slight refinement:
Point #1, which is- [quote=âricky_, post:17, topic:4361â]1. A company has to make lots of money.[/quote].This alone will make sure that everything else will take care of itself.
Seniors, please correct me if I am wrong.
Which in turn means we will need to focus on
Thats all
Hats off to me