The price is everything when buying
I always emphasize the quality of buying company with stock at its fair price or lower. That does not mean I will not pay a small premium for a company that sells more than its fair value. I like to start any discussion of the fair price with the price is everything [QuickReviewStockSelection
Always invest as your personal income generating business. If you are a business, you have to make sure that it will increase revenue and profit over time
Develop your own business plan. Write a brief, concise plan as your investment roadmap
Another fundamental investment is in good business, just as you are buying the entire company across the company.
- How does the company make money?
- What is difficult to match the advantages that it has over similar competitors?
- Does it have a significant brand name or product line?
- Consider high-value licenses, trademarks, patents or copyrights?
- Is the corporate management team strong, competitive and shareholder friendly?
The third principle is the purchase of stocks (commercial), as if never sold. Evaluating the company has a "hold" mentality
Finally, buy stocks at fair or lesser prices.
It is important to be aware that you are buying up current and future revenue growth potential.
Fair Price Is Important
According to the fair price trend, let us define the fair price as the share price, which will bring you the highest compound annual revenue growth.
The compound annual growth rate (CAGR) is a growth rate that will shift you from your initial investment value to an expected future value based on an investment compound
Pay for the return you want.
Take a look at this example of prices that determine the rate of return
Suppose we check Sudsy Soap and find a long- The management team that generated stable financial results over the past few years
We also found that Sudsy has a strong brand presence, a great distribution system, the highest rated "green" environmentally friendly products on the market, and patent protection Formulations
Solid earnings growth for five and ten years, Sudsy has strong balance sheet, low debt and positive free cash flow. Given this data, we can predict a company's stock price of $ 26 per share, and the current earnings per share of $ .19459005
Paying $ 26 per share for the first year, $ 4.65 for the first year, $ 4.35 for the first year, $ 4.35 for the first (19459005)
] Sudsy With a year later our rate of return is 18% ($ 4.69 / $ 26 = 19%)
($ 4.69 / $ 21 = 22%) at $ 21 per share, compared to + 4% on fair value purchases
If you wait for Sudsy to buy into the market Fixed a 30% discount? (19459004)
The return from the stock price of $ 18.20 is 26 percent ($ 4.69 / $ 18.20 = 26 percent, relative to fair value +
As we pay current and future earnings growth
Price is everything In determining the highest compound annual growth rate