Investment philosophy
The price of stocks are a sum of three parts
1) Quality of the company
2) Future earnings of the company
3) Value of the stock
1) Quality of the company
- Quality of the company consists of 2 components
- The current industry the stock is in
- The historical/current financial health of the company
The current industry the stock is in involves checklists such as
- Stability of the industry
- Monopolistic/Oligopolistic nature of the company
- Company's branding
The historical/current financial health of the company
- Earnings track record (net margins, volatility in earnings, historical growth etc)
- Debt (interest coverage, D/E etc)
- Productivity (ROE, ROA)
- Cash flow (FCF, growth of OCF, expenditure on capex)
Summary: The quality of the company is used as a screen to find out which companies to look at. As a retail investor/long term holder we do not ......