Tag Archives : value investing


Paying Up For Quality Growth Stocks – What Makes A Great Business

Great businesses produce great returns. As Warren Buffet said “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” Rather than heading the great porches advice, most investors underestimate business quality which results in unduly low market valuations for the very best companies. As an individual investor, understanding quality and its true value can lead you to craft an investment strategy that exploits market inefficiencies. What Makes an Extraordinary Business So what makes a business extraordinary that deserves a premium rating? A truly great business can come in many guises but by and large there is a need for an […]


How Benjamin Graham Valued And Bought Stocks

Ask any professional investor about Benjamin Graham and they will tell you he deserves his place amongst the top 10 greatest investors of all time. Ask Warren Buffet and he’ll certainly place Ben Graham as number 1. Benjamin Graham is the father of value investing and wrote one of the book that shaped many an investors career; investors Security Analysis. The book which is seen as the bible of the value investing world is an essential read for anyone wishing to invest in individual stocks. Benjamin Graham’s value investing strategy was focused on buying stocks with the same discipline as an insurance underwriter, carefully considering the risks, rejecting potential securities […]


10 Cheap Stocks To Buy Using Different Valuation Metrics 4

Everybody loves to spot a bargain and investors scouring stocks are no different. But what many new investors fails to understand is that there is a difference between shares which are ‘cheap’ and those which offer genuine value. To help in identifying undervalued stocks, there are a number of ratios to look at. In this article, we will see which shares are cheap based on P/E ratios, PEG ratios and Price to Book ratios 1. Price to Earnings Ratio (P/E) P/E Ratio = current share price / earnings per share If Company A currently has a share price of 100p and is forecast to generate earnings per share of 20p […]


March Stock Purchase: GSK, Shire, NCC, Stagecoach 2

March saw the FTSE 100 hit a record high. London’s main index is now trading at an astonishing P/E of 38 when looking at trailing earnings. On a forward earnings basis, the FTSE only trades at a P/E of 14.67. Much better! The vast disparity between the two is because the heaviest components of the FTSE 100 are oil and mining related stocks. With commodity prices bouncing back, analysts expect these companies to produce much higher earnings over the year and that is why the forward P/E is more than twice as low as the trailing P/E. Personally, I think analysts are being too kind with earnings here but if […]


Burberry (LON:BRBY) Shares Sale : When A Stock Is Overvalued Sell

Having gone years without selling out of a position, it feels odd writing about my second share sale so quick after my first one. Making my second stock sale all the more remarkable is I didn’t think it would be Burberry. Since initiating my position in Burberry back in July 2016, I imagined that I would be holding these shares for years and years – even though I didn’t see it as a legacy position. Whenever I make a stock purchase, the company I am investing in either has to be a serial compounder of wealth or it is fundamentally undervalued. The biggest opportunities for large returns are by buying […]


Estee Lauder (EL) Share Purchase – Wonderful Companies Deserve High Valuation Multiples

Those familiar with my investment approach know that one of my key philosophies is to buy shares trading at a Price to Earnings ratio of under 20. Simply put, I do not like to overpay for stocks. It may thus come as a surprise that I purchased shares in the Estee Lauder company (NYSE:EL) whose shares trade at a P/E ratio of 24. No, I have not lost my mind! Neither have I thrown my investment thesis out f the window. Rather, I have bought shares in Estee Lauder due to its high returns on equity (ROE). To understand the concept of Return on Equity, have a look at the […]


To Be a Successful Stock Market Investor Think Like a Business Owner

Modern day stock picking is akin to gambling money in a casino, you place money on a particular ticker symbol and hope that it goes up. How many times have you read an article on that ‘one magic stock’ or seen people speculate on a single stock based on an online forum. The majority of people think that the stock market is a route to overnight millionaire status. The mass media has led people to believe this as they selectively run stories on people who have become millionaires overnight based on a single stock pick whilst sunning the countless others who have lost it all by placing everything, including their […]


The Warren Buffet Blueprint – 4 rules to follow when investing

You can buy stocks like one of the world’s most famously successful investors, if you just follow his blueprint. To this day, Warren Buffett’s success is legendary… And whether he’s buying an entire business outright or simply purchasing shares of its common stock, the “Oracle of Omaha” says he has always taken the same approach. Buffett employs a “bottom up” approach that looks closely at all aspects of a particular business, irrespective of things like the macroeconomic environment or the direction of the stock market. The Warren Buffet blueprint all hinges on four simple rules. These are the things that Buffett considers all-important. If you look for them, you can […]


Use Return on Equity (ROE) to find great stocks like Warren Buffet !

One of Warrant Buffets best criteria for picking stocks is using the Return on Equity Formula. Just take a look at the annual report of Berkshire Hathaway – the company Mr Buffet Runs – for proof of this. Under acquisition criteria number three, it states that a company must generate a good return on equity (ROE) while employing little or no debt. So why is ROE such an important metric? The Return on Equity reflects the management’s ability to allocate capital efficiently and effectively. It measures how much return is generated for every dollar of shareholder equity. Companies with high ROEs – greater than 155 – have the ability to […]


BT (BT.L) Stock Purchase – A proxy of the British consumer 2

In a recent post outlining my Astrazeneca share purchase, I mentioned that I had bought shares in BT as well. I bought 272 shares at a stock price of 397. Since then, the BT share price has gyrated bouncing up and down between a stock price of 450 and 350. A movement within such a large range over a short period of time is rare for blue chip stocks and it is fair to say that BT has been volatile in the wake of the Brexit vote. Talking about Brexit, British focussed businesses have faced the biggest brunt in term of decreased valuations. FTSE 250 companies along with Banks, Insurers […]