Things to note before deciding if I should invest in this company
1. What is the business model?
How does your company make money? Which avenues constitute what percentage of earnings? These are important questions to consider.
2. Moat
Your company should be well-protected against its competition. A good indicator is its Gross Margin Percentage. An average gross margin is ~40%. If your company's gross margin exceeds 40% *CONSISTENTLY* for the past years, it indicates a strong moat.
3. Growth Drivers
It is imperative to consider a company's potential for growth. Look at its business model and how well the major constituencies contribute to the earnings for the past quarters and years. Growth rates and sales figures being stable and high consistently are relatively safe indicators of a healthy growth potential and of healthy growth drivers for your company.
4. Share buybacks and dividends
As an aside, a cherry on top, look at your company's annual dividend yield. Note that there exists dividend funds that specialise in primarily bringing high annual dividend yields of around ~3%, such as $Schwab US Dividend Equity ETF(SCHD.US$ .
It is of paramount importance to consider these 4 points when deciding whether or not a company is worth investing in. Just as Warren Buffet has tipped, identify companies with a high, unrealised intrinsic value (through these steps), buy with a long-term mindset and hold. Sell only when their share prices rise and their intrinsic value has been realised. Safe investing and happy labour day! ![]()
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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Crystal Ashley : Thank you for sharing!