Warren Buffett is the best investor in the world.
He uses a clear checklist to make investment decisions.
You can steal it here:
He uses a clear checklist to make investment decisions.
You can steal it here:
We will cover the following:
- Value
- Efficiency
- Health
- Dividend
- Growth
- Ratings
- Technical
- Management
- Impact
- Performance
- Value
- Efficiency
- Health
- Dividend
- Growth
- Ratings
- Technical
- Management
- Impact
- Performance
The value checklist
Price / Earnings < 15.0
Price / Book Value < 1.5
Price / Sales < 1.5
Price / FCF < 15.0
PEG < 1.0
Price / NCAV < 1
EV / EBITDA < 8.0
Current P/E is <40% of 5yr P/E High
Current P/E is <80% of 5yr P/E Low
Price / Earnings < 15.0
Price / Book Value < 1.5
Price / Sales < 1.5
Price / FCF < 15.0
PEG < 1.0
Price / NCAV < 1
EV / EBITDA < 8.0
Current P/E is <40% of 5yr P/E High
Current P/E is <80% of 5yr P/E Low
The efficiency checklist
ROE > 30%
ROA > 15%
ROTA > 20%
ROIC > 20%
ROCE > 20%
ROIC-WACC > 0.2
Inventory Turnover > 4.0
Accounts Payable Turnover > 3.0
Accounts Receivable Turnover > 5.0
Pre-tax Margin > 15%
Free Cash Flow Margin > 10%
ROE > 30%
ROA > 15%
ROTA > 20%
ROIC > 20%
ROCE > 20%
ROIC-WACC > 0.2
Inventory Turnover > 4.0
Accounts Payable Turnover > 3.0
Accounts Receivable Turnover > 5.0
Pre-tax Margin > 15%
Free Cash Flow Margin > 10%
The health checklist
Current Ratio > 1
Quick Ratio > 1.5
Flow Ratio < 1.25
Liabilities / Equity < 0.8
Debt / Equity < 0.5
Debt / EBITDA < 4.0
Debt / TBV < 0.7
EBIT / Assets > 20%
Long-term Debt / Working Capital < 2.0
Interest Coverage Ratio > 8.0
FCF / Sales > 8%
Current Ratio > 1
Quick Ratio > 1.5
Flow Ratio < 1.25
Liabilities / Equity < 0.8
Debt / Equity < 0.5
Debt / EBITDA < 4.0
Debt / TBV < 0.7
EBIT / Assets > 20%
Long-term Debt / Working Capital < 2.0
Interest Coverage Ratio > 8.0
FCF / Sales > 8%
The dividend checklist
Dividend Yield > 2%
Dividend Yield > ⅔ the AAA Bond Yield
Number Of Consecutive Years Increasing Dividends > 9
FCF / Dividends Paid > 2.5
EPS / Dividends Paid > 2.5
Payout Ratio < 40%
No Dividend Cuts In The Last 10 years
Dividend Yield > 2%
Dividend Yield > ⅔ the AAA Bond Yield
Number Of Consecutive Years Increasing Dividends > 9
FCF / Dividends Paid > 2.5
EPS / Dividends Paid > 2.5
Payout Ratio < 40%
No Dividend Cuts In The Last 10 years
The growth checklist
Earnings Yield > 12%
EBIT Yield > 12%
FCF Yield > 10%
Forward P/E / Trailing P/E > 1.1
Operating Cash Flow > EPS
Number Of Years With Declining EPS < 2
Current EPS / EPS 10 years ago > 3.0
Earnings Yield > 12%
EBIT Yield > 12%
FCF Yield > 10%
Forward P/E / Trailing P/E > 1.1
Operating Cash Flow > EPS
Number Of Years With Declining EPS < 2
Current EPS / EPS 10 years ago > 3.0
The ratings checklist
- Altman Z-score >= 3.5
- Piotroski F-score >= 7.0
- Beneish M-score < -3.0
- Altman Z-score >= 3.5
- Piotroski F-score >= 7.0
- Beneish M-score < -3.0
The technicals checklist
- Positive 1-month price momentum
- Positive 3-month price momentum
- Positive 6-month price momentum
- SMA 50 > SMA 200
- EMA 12 > EMA 26
- RSI < 30
- Positive HMA
- Positive 1-month price momentum
- Positive 3-month price momentum
- Positive 6-month price momentum
- SMA 50 > SMA 200
- EMA 12 > EMA 26
- RSI < 30
- Positive HMA
The management checklist
- Management shareholding > 10%
- Management have bought more shares than were sold in the last 3 months
- Management Compensation growth rate < Revenue Growth Rate
- Management shareholding > 10%
- Management have bought more shares than were sold in the last 3 months
- Management Compensation growth rate < Revenue Growth Rate
The impact checklist
- CDP Climate Score = A
- Total ESG Risk Score > BB
- Beneish M-score < -3.0
- CDP Climate Score = A
- Total ESG Risk Score > BB
- Beneish M-score < -3.0
The performance checklist
- Sales
- Earnings
- Book value
- Free cash flow
- Dividends
- Return on equity
- Current ratio
- Debt / equity (declining)
- Net margin (declining)
- Inventory turnover
- Sales
- Earnings
- Book value
- Free cash flow
- Dividends
- Return on equity
- Current ratio
- Debt / equity (declining)
- Net margin (declining)
- Inventory turnover
That's it for today.
If you liked this, you'll love the summary I made from reading ALL public writings of Warren Buffett.
You can grab it here: compounding-quality.ck.page
If you liked this, you'll love the summary I made from reading ALL public writings of Warren Buffett.
You can grab it here: compounding-quality.ck.page
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