I've been searching for quality stocks at fair prices,because it's my belief that great companies will allows investors to build significant wealth in the long term. There are about 5 checkpoints I use- First the company must generate a lot of cash and be competitive. This means that they must have an above average return on invested capital AND cash return on investment, using FCF/Invested Capital. Both must be significantly above the average cost of capital for the business. The second thing I look for is a wide economic moat. Something to protect their profit margins and returns. Thirdly, I analyze the growth potential and strength/quality of the business with Philip fisher's fifteen points. Also, the share price must be attractive contrarian wise. And lastly, the executive management must be competent and dedicated to shareholder value.
Unilever: (ADR: UL)
Check 1- With a few calculations, UL easily passes this with a TTM ROIC of 20%, and a CROIC of 16%. Both significantly above the WACC of 8.3% Check 2- According to the company, 2.5 billion people a day use Unilever products. The brands they own such as dove, axe, and Lipton are extremely common household products, giving it a wide moat. Check 3- UL passes about all of the points. Check 4 - The stock price is 55 dollars, a discount to the quality and scale of the business. Check 5- Paul Polman, the CEO, is an excellent man of integrity, who is dedicated to making his business more sustainable for high profitability and growth by lowering costs and analyzing consumer trends.
I'm just starting to follow it, I would definitely appreciate a second opinion, or if someone knows anything I don't
Submitted December 29, 2017 at 09:49PM by Harrisonmeyer0 http://ift.tt/2Ec3vwC
