Category: Technique

There are many different ways to make money from the stock market. Over the last few years, one of the most popular and discussed strategies has been about buying the shares of high quality businesses or quality investing. Warren Buffett has long been a cheerleader for long-term investing in quality companies. In the UK, the […]

Highly profitable companies can make outstanding long-term investments. Arguably, the best way to measure a company’s profitability is to compare its profits with the amount of money invested to make them. This is known as the return on investment or return on capital employed (ROCE). One person’s definition of a highly profitable business will differ […]

A couple of weeks ago I wrote about the issues investors faced in working out a company’s true profits. In many cases, the ways in which companies calculate their so-called adjusted profits are becoming increasingly absurd. Investors are frequently asked to ignore certain real costs so that profits are as big as possible. The harsh […]

This article is more suited to experienced investors. Profits are all important when it comes to investing in companies. To make money over the long haul it usually helps to invest in a company that is growing its profits. The more profitable a company is, the more valuable its shares tend to be. However, profits […]

Should investors pay much attention to analysts’ profit forecasts? There is a school of thought that suggests that they should not. Detractors say that forecasts are nothing more than educated guesswork and that analysts are very bad at predicting changes such as profit warnings or recessions. In many cases, forecasts are merely the extrapolation of […]

There are many full time private investors out there but for others investing is a hobby or something that they fit around their day to day activities. If you don’t have a lot of time on your hands one of the toughest tasks you will have is narrowing down the list of potential investments on […]

It doesn’t take too much time to get a feel for how well a company is doing. Most people do this by looking at percentage changes in key numbers – such as turnover and profit – from one period to the next. They may also look at key ratios such as profit margins or return […]

One of the most commonly cited measures of a company’s financial strength is something known as the current ratio. It is a measure of liquidity and compares a company’s current assets – defined as assets that can be turned into cash within one year – with its current liabilities (those which have to be paid […]

In the last of his Investors Chronicle articles, Phil looks at companies reinstating dividends or starting to pay them for the 1st time. Read pdf article

First published in Investors Chronicle, Phil explains how to avoid the shares that might let you down. Read pdf article

First published in Investors Chronicle, Phil explains how to identify which high-yielding shares are most likely to maintain or grow their dividends. Read pdf article

Two weeks ago I wrote about how to try and value companies that aren’t making a profit. This week I’m going back to basics for more inexperienced investors. Although I’m sure there will be some reminders here for regular readers. For many successful investors, the price they pay for a share of a company is […]

How to value loss-making companies One of the questions I am frequently asked is: “How do I value loss-making companies?”. The short answer is that it can be really quite difficult. It is so much easier to try and value profitable businesses with an established financial history. However, the value of any business is based […]

Most people like a bargain. Bargain hunting on the stock market has long been a popular pastime or even a full time occupation for investors. There’s no shortage of books, articles and advice that tell investors to pursue a ‘cheap is best’ strategy if they want to get rich. Yet in most cases there is […]

I am finding investing more than just a little bit frustrating these days. The reason for this is that I am struggling to find shares that I am comfortable owning for the long haul. To put it simply, I think my favoured high quality businesses are overpriced whilst the valuations on many so called growth […]

In my 20 years of investing I am finding the current stock market conditions the most challenging I have ever encountered. My investing career started during the early stages of the TMT (technology, media and telecoms) boom. The case for investing in these sectors was based on a belief in transformational business models and the […]

A couple of weeks ago I wrote about the subject of PE ratios (click here to read the article) and the ins and outs of using them to value companies. One of the main drawbacks of PE ratios – and any valuation using a share price – is that it can be distorted by the […]

PE ratios and how to use them Price to earnings (PE) ratios are the most commonly used method of weighing up the value of a company and its shares. They are calculated using the following simple formula: PE ratio = Share price/Earnings per share (EPS) PEs are popular with investors because of their perceived simplicity […]

Ask me about the kind of financial characteristics I like to see in a potential investment and the first two I will usually cite are as follows: A high and sustainable return on capital employed (ROCE). Ideally I am looking for companies where ROCE adjusted for rented assets (leases) is more than 15%. Conversion of […]

Running filters or screens is a popular way of finding shares to invest in. Whilst screening can be very powerful it is important to recognise that blindly buying shares which meet a set of financial criteria is rarely a route to success. Good investors use screening as a way of concentrating their research efforts. SharePad […]

When it comes to weighing up asset-intensive sectors, depreciation matters. It is a real cost. This does not stop people ignoring it and touting the merits of companies based on their EBITDA. Investors ignore the significance of depreciation at their peril and should be suspicious of companies that talk about EBITDA too much. To get […]

Accounting is a dry subject but a very important one. I perfectly understand why private investors’ eyes glaze over at the mere mention of the topic. That said, I am a firm believer that when it comes to this subject a little knowledge can go a long way and can help you make better investment […]

In this instalment, Phil explains how to spot value traps and finds some cheap shares that might bounce back. Read the article

In this week’s Investors Chronicle, Phil explains how to use free cash flow to your advantage. Read the article

Many private investors like to build a portfolio of individual shares in order to grow the value of their savings as well as trying to beat the market as a whole. But some also like to complement their portfolios by owning investment funds. One of the best and easiest ways to do this is to […]

Note: This in an advanced article best suited to more experienced and confident investors. One of the most profitable investing strategies can be to buy the shares of rapidly expanding retail companies – when a company sets out a plan to open lots of new stores over a period of time. This is affectionately known […]

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” – Warren Buffett “The desirability of a business with outstanding economic characteristics can be ruined by the price you pay for it. The opposite is not true.” – Charlie Munger The quote from Warren Buffett above is often cited […]