- Characteristics of a Consumer Monopoly
- Consistently focused in Business Operations
- Strong Cash Flow
- Positive Return on Equity for 10 years or more
- Little Debt
- High and Increasing Profit Margins
- Efficient use of Retained Earnings
- Ability to quickly adjust to Inflation
- Consistently High Earnings Yield
- Be on Sale at the Time(s) of Purchase
I would add an 11th qualifier; competent and capable management, but I think it is safe to assume if a management team is able to score big on these 10 qualifiers; then they must be competent and capable.
So, here are the qualifiers by which I will judge the businesses we discover. The only exception that I will make is that dealing with IPO's. The nature of an IPO may easily disqualify it according to this checklist. But, as I mentioned in an earlier post, IPO's can offer some nice early gains that can really help your portfolio to grow quickly.
All for now.
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4 comments:
hi
the check list looks good. this is what i would ideally look for. unfortunately companies which are good and may check out on all these parameters are rarely available a low prices
regards
rohit
Hi Rohit - Thank you. I think the checklist is definately a wip (work in progress) for the more I learn in this stock market journey, the more I'll need to revisit this list and adjust it accordingly.
Time will tell.
I agree that it will be a challenge in finding these at low prices. But I would guess that will have to determine what "low" is relative to the value of the business and what I would be willing to pay for it.
Just one more thing I will need to learn and understand, and hopefully quick.
Be well.
alisa,
unless you plan to just flip ipos you should apply the same criteria to ipos that you do to everything else.
Hi anonymous -
Will I be able to get the same data on IPO's? Like historical earnings, profits, losses, debt, etc? Will this historical information be available on a private company before its ipo?
I never thought about it but I guess I was thinking of "flipping ipo's"; especially the ones that do not fully comply to the checklist.
What are your thoughts?
Thank you?
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