I've been planning to come up with this post for quite some.
It serves as my personal check list, so that I won't miss out anything when I do my company stock evaluation.
Most of the Long Term Investing approach focus closely on fundamental analysis, and I'm no different here.
Most of the stuff here I believe, you've seen it somewhere. It's definitely not from me. I'm just reiterating it here, so that it reminds me and serves as written guideline to me.
| 1. | Avoid Price Competitive Industry (link) |
| Do not invest in industries which doesn't have any edge, whereby price is the only sole factor that wins the customers. | |
| 2. | Economic Moat (link) |
| Does this company have any sort of business edge compared to its competitors from the same sectors? | |
| 3. | Growth (link) |
| Is this company growing consistently for the past 10 years or so? | |
| 4. | Profitability (link) |
| Is this company's profitability matrix improving, or at least, staying at good ratio consistently? | |
| 5. | Financial Health (link) |
| How's the financial health of the company? Can it pay back it's debt and yearly interest on time? | |
| 6. | Compare with Competitor (link) |
| Compare this company with its direct competitors. How does it fare compared to its peers? | |
| 7. | Calculate Intrinsic Value (link) |
| Once everything is in place, it does not mean that we'll jump into the stock straight away. We only want to buy it when the stock price is selling at a discounted price to it's intrinsic value. |
This 7 steps pretty much sums up the process that I use to go through while doing my evaluation on a company's stock.
In the near future posts, I'll fill in the missing (link)s, and explain more in detail about each of the 7 points mentioned above.
http://lionel.textmalaysia.com/long-term-stock-investment-strategy.html
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