Everybody wants to make money, big money over the long-haul. You put money into a stock and get twice of this amount back in 10 years. That's great and I have often invested into stocks that doubled in a decade easily.
Today I like to come back to return. It's very important to see that the company makes good profits on its annual sales. The higher the margin, net or operational, the better is the market dominance of the firm.
I like companies with high margins, Google and Apple have unbelievable high margins. You might wonder but they have no direct competition and can charge customers each price they want, there is no alternative and if you need those products or you think you must have them, you must pay the bill.
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Warren Buffett is also a great investor who invested into stocks that produce high returns on invested capital. It's the guarantee that the firm makes internal revenues which could be used to pay investors.
I ran a screen that searched for the accompanying criteria:
- Average returns on invested capital > 12% over the last 5 years
- Current return on invested capital > its 5-year average
I sifted further for organizations with a long history of solid sales and profit improvements combined with robust, and enhancing, net revenues that are not profoundly leveraged by debt. I added the accompanying extra criteria:
- Average sales growth > 10% over the last 5 years
- Average EPS growth > 10% over the last 5 years
- Average operating profit margin > 10% over the last 5 years
- Current operating profit margin > its 5-year average
3 companies jumped on top of my screen. Very informative...