Investing in stock marketing is about three things: Education, Discipline & Patience!
Anyone can invest in the stock market. That does not mean, everybody should.
Below is my investment criteria:
- Net Profit Margin > 15%.
- Revenues over the past 10 years are growing consistently. Not stagnant, but growing.
- Earnings per share (EPS) should be positive and growing consistently over the past 10 years.
- Debt to Equity levels should be low or none.
- Retained Earnings should be positive and growing consistently over the past 10 years.
- Number of shares issued should to be consistent over the past 10 years.
- Price to Earnings (PE) Ratio should be under 10. Even better if under 5. Avoid if negative.
- Market Cap is equal to or less than 1.5 times it’s tangible book value.
- The company is going through a temporary problem, or the company’s stock is down because the sector or market as a whole is down, not because there’s anything wrong with the business.
Note: The stock has to meet every single one of these criteria for me to invest in it. No exceptions.
This criteria excludes 95% of the stocks on the market. But that’s where the fun is … finding the needle in the haystack. All this investment criteria does is tells me what the needle I am looking for, looks like.