I believe sharing knowledge grows a community so I’ll share mine.
I start with a business I can understand to see how they operate. The space they operate in. The competition.
1. I search to see if their gross margins are at least 25%
2. I look to see if the payout ratio is <70%
3. Identify a moat through reading company annual reports
4. Read income statement to see if revenue is increasing in 3,5,10 year span
5. Identify if operating income is increasing faster than operating expense
6. Find the operating cash flow from cash flow statement and eliminate companies with continuous operating loss.
7. My operating cash flow must be higher than my financing and investing cash flow
8. My Free Cash Flow must be treading upwards
9. Balance sheets to make sure GOODWILL is not the main contributor of ASSETS
10. Make sure the shares are not being diluted
11. Apply financial ratios of DE, DA, ICR, PE,PS, PB
12. Research the CEO
13. Apply discount cash flow model
Thanks in advance this is my strategy I hope you guys benefit from it or at least are willing to share yours. Thanks so much
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