Does the Company Have a Proven Earnings Per Share Track Record
Invest in Business Fundamentals – Not just stock price
Buying a Business – Not Just Buying Stocks
First things first, when buying any stocks, the mindset should change. You are essentially buying a business… a business that you will invest and put your money in. Not only just getting into position but adding more and more capital into the business.
So the most logical when looking at investing, we want to invest ONLY in profitable companies. Companies that do not have a profit, then it’s a NO go regardless of how attractive or potential it may be. As investors, we do not take chances or place our financial future based on promises. We invest our money into companies that are already proven and growing.
It’s just like hiring an employee. Would you invest an expensive course for a new hire with no track record? Or would you do it for a new hire that has a 10 year proven track record? Well, I hope you have selected the latter because we go for certainty as much as possible in the world of investing. There’s no second guessing and there’s no speculation.
We look for Companies with 10 year Proven Consistent Earnings Track Record
So when we invest, we go for companies with a proven track record and I personally will choose companies with a minimum of 5 years track record… but my preference is 10 years of proven track record. What do I mean by proven? I will focus on companies with 10 years of profitable growth. We do not want to invest in companies that have inconsistent growth record or earnings record. Why? Because it’s absolutely much easier to predict the future of a company if their past record has been consistent.
Take a look at the below Earnings track record for 3 different companies. All these companies have profit and all are good companies.
Which company would you pick to invest in?
Would you invest in this company?
Or will it be this one below?
All 3 companies are good pick as all are profitable. But a true investor will always pick #2 as it’s a lot more easy to predict it’s future as it has much better consistency as compared to the 1st and 3rd chart.
Pick only the Best of the Best… Why Settle for 2nd Best?
However, 1st and 3rd charts aren’t bad picks as well. It’s just that more than 14,000 stocks to select from in United States, why settle for 2nd best. This is where we are investors have the luxury of choosing the best of the best companies to be in our portfolio.