Hello! The answer to your question will depend on what your investment timeframe is. If it's anything less than 3-5 years, my answer won't be useful for you. But if you're looking to invest in companies for multi-year periods, I'm happy to share my investment framework.
The framework's foundation is first built on what exactly is the stock market, and it is a place to buy and sell pieces of a business. Having this basic but important understanding of the stock market leads to the next observation, that a stock’s price movement over the long run then depends on the performance of the underlying business. In this way, the stock market becomes something easy to grasp: A stock’s price will do well over time if the underlying business does well too. The next logical question then follows: Is there a way to find companies with businesses that could do well in the years ahead? I think there is. I've been investing for 9 years, and I tend to look for companies with the following characterisitics:
1) Revenues that are small in relation to a large and/or growing market, or revenues that are large in a fast-growing market.
2) A strong balance sheet with minimal or a reasonable amount of debt.
3) A management team with integrity, capability, and an innovative mindset.
4) Revenue streams that are recurring in nature, either through contracts or customor-behaviour.
5) A proven ability to grow.
6) A high likelihood of generating a strong and growing stream of free cash flow in the future.
I'll keep the discussion brief in this forum answer, but you can head here for a deeper look at the six criteria. Hope this is helpful! Happy to continue the conversation here!
Hello! The answer to your question will depend on what your investment timeframe is. If it's anything less than 3-5 years, my answer won't be useful for you. But if you're looking to invest in companies for multi-year periods, I'm happy to share my investment framework.
The framework's foundation is first built on what exactly is the stock market, and it is a place to buy and sell pieces of a business. Having this basic but important understanding of the stock market leads to the next observation, that a stock’s price movement over the long run then depends on the performance of the underlying business. In this way, the stock market becomes something easy to grasp: A stock’s price will do well over time if the underlying business does well too. The next logical question then follows: Is there a way to find companies with businesses that could do well in the years ahead? I think there is. I've been investing for 9 years, and I tend to look for companies with the following characterisitics:
1) Revenues that are small in relation to a large and/or growing market, or revenues that are large in a fast-growing market.
2) A strong balance sheet with minimal or a reasonable amount of debt.
3) A management team with integrity, capability, and an innovative mindset.
4) Revenue streams that are recurring in nature, either through contracts or customor-behaviour.
5) A proven ability to grow.
6) A high likelihood of generating a strong and growing stream of free cash flow in the future.
I'll keep the discussion brief in this forum answer, but you can head here for a deeper look at the six criteria. Hope this is helpful! Happy to continue the conversation here!