50 Quality Companies 👑
Use a stock screener to eliminate 95% of stocks
Instead of going through ~55.000 publically traded global companies to find a few great ones, use a screener. A screener will get you a ton of great ideas to study further, and it only takes a few minutes.
In my book I discuss several screeners one can use, but one of my favorites is the Terry Smith-inspired quality screener below.
Criteria used:
ROCE 5Y Avg. +15%
EPS CAGR 10Y +7%
Gross Margin +40%
Operating Margin +15%
Interest Cover +10x
FCF 5Y CAGR +5%
If you like this, you will love this article where I break down our investable universe:
The Result:
Screener source: Stockopedia.com — Try it for 14 days for free & get 25% off using our affiliate link: https://why.stockopedia.com/investinassets/
5 Companies have an exceptional score on all 6 factors
Many of these 50 stocks are well-known to informed investors. However, some names here might be new to you. I’ve marked the cells green where I believe the company scores exceptionally:
FCF 5Y +15%
Gross margin +60%
Interest cover +30x
Operating margin +25%
ROCE 5Y +20%
EPS 10Y +20%
In order of market cap:
Adobe ADBE 0.00%↑
Regeneron Pharmaceuticals REGN 0.00%↑
KLA KLAC 0.00%↑
Old Dominion Freight Line ODFL 0.00%↑
Paycome Software PAYC 0.00%↑
Valuation is not considered in this screener, but these 5 companies have exceptional business quality from a quantitative standpoint.
There are other factors to consider, such as:
Business model
Unit economics
Competitive advantage & competition
Management
Insider ownership
Valuation & margin of safety
However, screeners can be the base from where you start your research process. As mentioned, it is better to get a set of 50 companies than to go through +55.000.
Whenever you are ready, this is how I can help you:
Essentials of Quality Growth — Join more than 200 investors who have bought the guide. Essentials of Quality Growth Investing is a multi-step guide for building a stock market portfolio of 10-20 high-performing quality compounders.
(Free) Valuation Cheat Sheet — Learn an easy and reliable method of valuing a business. Learn how to set a margin of safety for your investments.
(Free) How to identify a compounder — Learn how to effectively look for great companies that you can buy and hold for the long term.
Promote yourself to +5,000 stock market investors (48% open rate) — Contact us via: investinassets20@gmail.com