- A proven track record of growth. Winners win. I’ll be looking for companies operating in industries experiencing secular growth. Ideally, these are companies which have compounded revenue at least 10% per year over the last 5 years. I foolishly categorized TripAdvisor as a compounder in 2019 when the company’s revenue growth was sluggish in 2018-19.
- Moats. Internet platforms benefiting from network effects and high switching costs will be ideal. The strongest compounders benefit from multiple moats such as network effects, switching costs and economies of scale. TripAdvisor had network
Choosing winners is hard. So I came up with a stock picking checklist based on my past mistakes to see if I can improve my stock picking skills.
My strategy involves picking two categories of stocks: “Compounders” and “Deep value”.
“Compounders” are stocks which can increase their earnings over the long term. Holding such stocks over the long term can be highly profitable.
