14 August 2013

Smaller Cap Stocks Investing

Some of the pointers I read from the book Value Growth Investing. I try to summarize it and share it here with you:

  1. Strong Economic Franchise - EPS can increase every year consistently, clients willing to pay for the increment in price, net free cash flow (in another term - the company could spend lesser in PPE while maintaining a health growth in revenue and net profit) 
  2. A growing company in a mature industry (a.k.a. find a good company in a boring industry )
  3. Avoid counters that are widely under coverage by most research analysts 
  4. Strong Balance Sheet, prefer Cash & Equivalents > Total Debts
  5. Top Management keep buying from the Open Market 
  6. PEG Ratio < 1.0 indicating that the growth of EPS outpace the growth in PE 

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