The 8 “PILLARS” applied to my stock picking
To those that are value investors or learning to be one. You may have heard somewhere in your Journey , Eg: finding intrinsic value or how to determine whether a stock is under valued or over valued
Using $Alphabet(GOOGL)$ as an example. I’m here to share the 8 pillars I use which helps to summarise or tell a story of a company. (Labelled as 8 Pillars in the photo)
1. 5years PE ratio < 22.5
2. 5years ROIC > 9%
3. shares outstanding (decreasing or increasing)
4. 5years Cash flow growth
5. 5years net income growth
6. 5years revenue growth
7. Long term liabilities / 5yr FCF < 5
8. 5years price to FCF < 5
These 8 metrics serve as a guide to analyse a company growth, over/under valued, buyback purchase of shares.
Check marks given in green/red whichever metrics is met. However, doesn’t mean you buy when all 8 check marks are in green or you don't buy when all 8 check marks are in red.
These allow myself to dive deeper into the fundamentals and financial statement of a business. Making assumptions on my excel and getting an intrinsic value of a stock base on the data given.
"Every Investment is the present value of the future cash flow"
Therefore, it's a dilemma sometimes if we should invest in good companies or good prices. I must say then are ten of thousand stocks avaliable. Our job as a value investors is to buy great company at great prices.
Follow me as I continue to share my stock picking journey. If you have any stock you which to analysis, feel free to comment.
Thank you for reading through and feedbacks are always welcome on how I can improve my content.
Cheers!
Modify on 2024-10-07 20:33
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
