Here’s my latest article from Benzinga.com:
It takes a firm foundation!
Whether you’re building a house or a stock portfolio, success starts with a proper foundation. A house built upon the sand will quickly come tumbling down. Likewise, a portfolio built on weak stocks will inevitably produce poor results.
One of the biggest reasons most investors fail is because they are fail to build a proper foundation for their portfolios.
It doesn’t take a hyped-up article from the Wall Street Journal or Barron’s, a buy signal from Cramer, or an upgrade from a respected analyst that makes a stock a great buy. A great company possesses key attributes that set it apart from the rest of the pack. These basic building blocks make up what we at Faith-Based Investor call a “firm foundation”.
Here are 8 characteristics that make up a great company:
1. Needed Products and Services: It goes without saying, a company must have needed products or services. If a company has products and services nobody wants, they go out of business, plain and simple. Or if there isn’t a market to support their growth, then it stands to reason not many people will want to buy the stock either. It all comes down to supply and demand.
However, if you’ve found a company with products or services that are in high demand—you could be sitting on a gold mine. Did you buy Apple (NASDAQ: AAPL) when the Ipod first came out? Or Crocs Inc. (NASDAQ: CROX) when the rubber shoes first became popular? Or Netflix (NASDAQ: NFLX) when they first revolutionized the video rental business? You get my point; Companies (even if they are a fad must have a product or service in high demand). Finding a company with products or services that are in high demand is a must! Don’t just look for fads but look for companies with staying power – those that can stand the test of time.
2. Markets: Consider the markets within which a company operates. If the market size can’t support sustainable growth or the marketplace is full of competitors with similar or better products, you could be wasting your time and money. We refer to this as a “moat”. If a company has no competitive advantage, it will eventually be swallowed up by fiercer, more dominant competitors.
Try to find a company with superior products or services that has few, if any, competitors and is operating within a unique market niche that is rapidly expanding. Finding such a company is a hard task indeed, but trust me, the fruits of your labor will be more than worth it.
3. Increasing Revenues and Earnings: In the investing world, a firm’s revenues and earnings are by far the main attraction. Nothing is sweeter to Wall Street’s ears than a company reporting, year-over-year, increasing revenues and earnings. If a company falls short on the earnings side, it is likely the stock will be punished. If a company exceeds expectations, it is highly probable the stock will be headed higher.
Read more: http://www.benzinga.com/trading-ideas/long-ideas/11/02/885248/8-characteristics-that-make-up-a-great-company#ixzz1FH5KATRN