Money and Finance
From Security Analysis (and maybe less relevant to a business with a wide moat):
Related previous post: Filters
- What Distinguishes A First-class Business From An Ordinary Business?
From Deep Value: In a cruel irony, most good businesses earning high returns on invested capital can’t absorb much incremental capital without reducing those high returns, while most bad businesses earning low returns on invested capital require all...
- Ben Graham On Reversion To The Mean...
From Security Analysis: It is natural to assume that industries which have fared worse than the average are “unfavorably situated” and therefore to be avoided. The converse would be assumed, of course, for those with superior records. But this conclusion...
- Growth At Dirt Cheap Prices (gadcp)
From Modern Security Analysis:In GADCP, there is no emphasis on estimating future flows. Rather it is recognized that growth in common stock prices can come, and frequently does come, from sources other than corporate operations. Growth can come...
- Peter Thiel Quote
From Zero to One (in this case, you can basically replace 'Monopolists' with 'Wide-Moat Businesses'): In business, money is either an important thing or it is everything. Monopolists can afford to think about things other than making...
- Walmart Stock Analysis
I ran Walmart through my screening process and was pretty intrigued by the results. Walmart is currently trading at $59.76. DCF Valuation: Analysts expect Walmart to grow 9.10% per year for the next 5 years and I've assumed that after that they will...
Money and Finance
Graham and Dodd quote
From Security Analysis (and maybe less relevant to a business with a wide moat):
These examples, extreme as they are, suggest rather forcibly that the book value deserves at least a fleeting glance by the public before it buys or sells shares in a business undertaking. In any particular case the message that the book value conveys may well prove to be inconsequential and unworthy of attention. But this testimony should be examined before it is rejected. Let the stock buyer, if he lays any claim to intelligence, at least be able to tell himself, first, what value he is actually setting on the business and, second, what he is actually getting for his money in terms of tangible resources.
There are indeed certain presumptions in favor of purchases made far below asset value and against those made at a high premium above it. (It is assumed that in the ordinary case the book figures may be accepted as roughly indicative of the actual cash invested in the enterprise.) A business that sells at a premium does so because it earns a large return upon its capital; this large return attracts competition, and, generally speaking, it is not likely to continue indefinitely. Conversely in the case of a business selling at a large discount because of abnormally low earnings. The absence of new competition, the withdrawal of old competition from the field, and other natural economic forces may tend eventually to improve the situation and restore a normal rate of profit on the investment..................
Related previous post: Filters
- What Distinguishes A First-class Business From An Ordinary Business?
From Deep Value: In a cruel irony, most good businesses earning high returns on invested capital can’t absorb much incremental capital without reducing those high returns, while most bad businesses earning low returns on invested capital require all...
- Ben Graham On Reversion To The Mean...
From Security Analysis: It is natural to assume that industries which have fared worse than the average are “unfavorably situated” and therefore to be avoided. The converse would be assumed, of course, for those with superior records. But this conclusion...
- Growth At Dirt Cheap Prices (gadcp)
From Modern Security Analysis:In GADCP, there is no emphasis on estimating future flows. Rather it is recognized that growth in common stock prices can come, and frequently does come, from sources other than corporate operations. Growth can come...
- Peter Thiel Quote
From Zero to One (in this case, you can basically replace 'Monopolists' with 'Wide-Moat Businesses'): In business, money is either an important thing or it is everything. Monopolists can afford to think about things other than making...
- Walmart Stock Analysis
I ran Walmart through my screening process and was pretty intrigued by the results. Walmart is currently trading at $59.76. DCF Valuation: Analysts expect Walmart to grow 9.10% per year for the next 5 years and I've assumed that after that they will...