I've always enjoyed immensely Adam Khoo's talks & videos, he's even posted actual stock tips when he bought Oil through ETFs in oil companies & oil futures on Youtube. I did a small trade, took a small profit before oil went into a strong uptrend (without me).
Nonetheless I hope this post will provide you with some yardsticks for your next investments ;)
*The following is adapted with my own notes, thus do refer to his original book for explanation as reference
7 Screens in Buying Great Companies at Huge Discounts
- Consistently Increasing Sales, Profit & Cashflow
- Sustainable Competitive Advantage (Economic Moat)
- High ROE, Net Profit Margin etc.
- Debt/Equity Ratio ~ below 50%
- Added this as the best fundamentals company can still get cheaper, thus its important to buy when its in uptrend!
Screens for Selecting REITS
- High Current Dividend Yield (>5%)
- History of Consistent Growth in AFFO & Dividends (5-10years)
- AFFO, Adjusted Funds from Operation
- Formula: Net Income + Depreciation - gain/loss from sale of property - capital expenditure
- Growth forecase 5%+ with hold/buy analyst ratings
- below NAV
- Intrinsic Value via Discounted Cashflow
When to Sell
- Price above Intrinsic Value + Reverse into Downtrend (price drop below 20, 50 Moving Averages)
- Better Investment Opportunity & Return
- Price fall as a result of permanent damage to company's reputation and/or Competitive Advantage
- Personally I find it extremely hard to find companies that matches the above that are undervalued; if you come across, I greatly welcome you to post in comments!
- Intrinsic Value (via EPS & discounted cashflow) can varies greatly, also it requires alot of patience to wait for stock price to fall below (say once every 3-7years market cycle)
- Growth are seldom consistent, even the best companies can have a few blips & some may reach its peaks before growth start to slow; when this happens its important to run as trends are likely to slow or change in view of slowing/reversing growth.
Nevertheless, its important to know what you are buying into; as Warren Buffett / Graham says investments are best treated like a business decision.
Good luck & may the trend be with you! ( * v * )")