- Will the business be around in 10 years or so ? What are the odds that something unforeseen can occur which may change the landscape completely ? Am I smart enough to see events that can break this business in long term ?
- Does the business have pricing power ? Can the business raise prices because of inflation or because it can ...and not loose customers ?
- Does the business have MOAT i.e. a sustainable competitive advantage ?
- Is the management shareholder friendly ? Does it have the right incentives ?
- Is it selling for a reasonable price taking into account the free cash flow it generates or will generate ?
- Is the business conservatively capitalized ? Is it highly leveraged ?
- Does the management allocate capital prudently ....be it dividends,share buyback or smart acquisitions ?
- If the business is cyclical I try to normalize the free cash flow it would generate over long term.
Friday, June 24, 2011
My own rules of investing
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