25 May 2013

Finding a Good Company

It takes a lot of time to find out a good company. For me, I would follow the following criteria:
  1. The company has a good management to take up challenges to find out new markets / products and they can spend time and money in doing advertisement to create brand awareness. 
  2. The CAPEX can be in a little amount for building up competitive advantages. So being into niche market or out source the non-core items could help to reduce the cost of doing business. 
  3. The business must have the power to fight against the inflation, or it has the bargaining power against customers when adjusting the selling price due to inflation. 
  4. The company focuses on just 1 industry, or at least have a dedicated team to focus on the industry, so that it could grow either horizontally or vertically. 
  5. A good business should always outperform its peers in terms of revenue or earning growth. Having a good ROE means the company could have its own formula to simulate growth. 
When you search out all the company that you think it is good for you to invest, just ask about few questions below:
  1. What is the price you think it is worth for and what is the price you would like to buy it
  2. How long is your investment time horizon and can you take the price uncertainty risk that you may experience the price fluctuation along the investment. 
However, I would think that it is worth to do more homework to dig out those good companies and just be patient to buy it whenever you think the price is right for you and hold for it until you get another good company to buy with cheaper price. 

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