๐ ๐๐ฒ๐ ๐ณ๐ถ๐ป๐ฎ๐ป๐ฐ๐ถ๐ฎ๐น ๐บ๐ฒ๐๐ฟ๐ถ๐ฐ๐
๐๐ญ: ๐ง๐ต๐ฒ ๐๐ป๐ฐ๐ผ๐บ๐ฒ ๐ฆ๐๐ฎ๐๐ฒ๐บ๐ฒ๐ป๐
The first place we look is the income statement. This is where the company tells us how much it sells and, more importantly, how much of that actually stays in its pocket after the party is over.
1.1 ๐๐ฟ๐ผ๐๐ ๐ ๐ฎ๐ฟ๐ด๐ถ๐ป: ๐ง๐ต๐ฒ ๐๐ถ๐ฟ๐๐ ๐๐ถ๐ป๐ฒ ๐ผ๐ณ ๐๐ฒ๐ณ๐ฒ๐ป๐๐ฒ ๐ก๏ธ
Gross margin is the percentage of revenue left after deducting the direct costs of producing the goods or services. A threshold above 40% is our smoke signal.
If a company has a high gross margin, it means it has a product people actually want and are willing to pay a premium for. If the margin is low, the company is in a price war with its competition, and in wars, everyone ends up bleeding. We look for companies that sell perceived "quality," not those begging for a penny of profit.
1.2 ๐ฆ๐ฒ๐น๐น๐ถ๐ป๐ด, ๐๐ฒ๐ป๐ฒ๐ฟ๐ฎ๐น, ๐ฎ๐ป๐ฑ ๐๐ฑ๐บ๐ถ๐ป๐ถ๐๐๐ฟ๐ฎ๐๐ถ๐๐ฒ ๐๐ ๐ฝ๐ฒ๐ป๐๐ฒ๐ (๐ฆ๐&๐) ๐
This is where we see if the management is frugal or if they have a taste for unnecessary luxury. SG&A expenses below 30% of gross profit indicate efficiency. If a company spends too much on marketing or internal bureaucracy just to sell the same amount, the product isn't selling itself. Operational efficiency is the difference between a company that creates wealth and one that just moves money from one side to the other.
1.3 ๐ฅ&๐ ๐ฎ๐ป๐ฑ ๐๐ฒ๐ฝ๐ฟ๐ฒ๐ฐ๐ถ๐ฎ๐๐ถ๐ผ๐ป: ๐ง๐ต๐ฒ ๐๐ป๐ป๐ผ๐๐ฎ๐๐ถ๐ผ๐ป ๐ง๐ฎ๏ฝ ๐งช
Investing in research (R&D) is great, but if a company has to spend more than 30% of its gross profit just to avoid becoming obsolete, you have a problem: you're on a treadmill that never stops. The same goes for depreciation; if it exceeds 10% of gross profit, the company needs to buy new machinery constantly just to keep functioning. We prefer businesses that don't need to reinvent the wheel every Monday.
1.4 ๐ก๐ฒ๐ ๐ ๐ฎ๐ฟ๐ด๐ถ๐ป ๐ฎ๐ป๐ฑ ๐๐ฃ๐ฆ ๐๐ฟ๐ผ๐๐๐ต ๐ฐ
At the end of the day, net profit is what counts. A threshold above 20% tells us we are looking at a money-making machine. But a static photo isn't enough; we want to see that Earnings Per Share (EPS) is positive and growing. If the company earns more and more for every share you own, your investment will grow naturally without you having to pray for the market to go crazy.
โ๏ธ๐ฎ: ๐ง๐ต๐ฒ ๐๐ฎ๐น๐ฎ๐ป๐ฐ๐ฒ ๐ฆ๐ต๐ฒ๐ฒ๐: ๐ฆ๐๐ฟ๐ฒ๐ป๐ด๐๐ต ๐ฎ๐ป๐ฑ ๐ฆ๐๐ฟ๐๐ถ๐๐ฎ๐น
If the income statement is the car's speed, the balance sheet is the chassis. If the chassis is made of paper, the first pothole will ruin the car.
2.1 ๐๐ฎ๐๐ต ๐ฎ๐ป๐ฑ ๐๐ฒ๐ฏ๐: ๐ช๐ต๐ผโ๐ ๐๐ต๐ฒ ๐๐ผ๐๐? ๐ฆ
The rule is simple: cash must be greater than debt. A company with a mountain of cash and little debt is the master of its own destiny. It can buy out struggling competitors, buy back its own shares, or simply sleep soundly. A heavily indebted company works for the bank, not for you.
2.2 ๐๐ฒ๐ฏ๐ ๐๐ผ ๐๐ฑ๐ท๐๐๐๐ฒ๐ฑ ๐๐พ๐๐ถ๐๐ ๐
We look for a threshold below 0.80. This measures how much of what the company owns has been financed by the owners versus lenders. A low ratio indicates the company is financially independent. We donโt want partners who owe their shirts; we want companies that finance themselves through their own success.
2.3 ๐ฃ๐ฟ๐ฒ๐ณ๐ฒ๐ฟ๐ฟ๐ฒ๐ฑ ๐ฆ๐๐ผ๐ฐ๐ธ ๐ฎ๐ป๐ฑ ๐ฅ๐ฒ๐๐ฎ๐ถ๐ป๐ฒ๐ฑ ๐๐ฎ๐ฟ๐ป๐ถ๐ป๐ด๐ ๐
Preferred stock is like an annoying guest who eats before you do; thatโs why we look for companies that have noneNONE. We want to be first in line to get paid.
As for retained earnings, we look for consistent growth. If the company saves money year after year and that pile grows, it means the intrinsic value of the business is increasing. Thatโs compound interest working in the shadows.
2.4 ๐ง๐ฟ๐ฒ๐ฎ๐๐๐ฟ๐ ๐ฆ๐๐ผ๐ฐ๐ธ: ๐ ๐ฉ๐ผ๐๐ฒ ๐ผ๐ณ ๐๐ผ๐ป๐ณ๐ถ๐ฑ๐ฒ๐ป๐ฐ๐ฒ ๐ณ๏ธ
When a company repurchases its own shares and keeps them in treasury, itโs saying: "There is no better investment than ourselves." Furthermore, this reduces the number of shares in circulation, making your slice of the pie bigger without you having to spend an extra cent. We want treasury stock to exist.
๐ญ๐ฏ: ๐ง๐ต๐ฒ ๐๐ฎ๐๐ต ๐๐น๐ผ๐: ๐ฅ๐ฒ๐ฎ๐น๐ถ๐๐ ๐ช๐ถ๐๐ต๐ผ๐๐ ๐ ๐ฎ๐ธ๐ฒ๐๐ฝ
Accounting can be creative, but cash in the bank doesn't lie. This is where mediocre businesses are separated from the cash cows.
3.1 ๐๐๐ฃ๐๐ ๐ ๐ฎ๐ฟ๐ด๐ถ๐ป: ๐ ๐ฎ๐ถ๐ป๐๐ฒ๐ป๐ฎ๐ป๐ฐ๐ฒ ๐๐. ๐๐ฟ๐ผ๐๐๐ต ๐
CAPEX (Capital Expenditure) is the money the company spends on physical assets. We want this spending to be below 25% of net profit.
If a company has to spend almost everything it earns fixing factories or buying trucks, thereโs nothing left for the shareholders. The best businesses are "asset-light": those that can double their sales without having to double their factories. Fewer bricks and more profits; thatโs the key.
๐ง ๐ฐ: ๐๐ป๐๐ฒ๐๐๐บ๐ฒ๐ป๐ ๐ฃ๐ต๐ถ๐น๐ผ๐๐ผ๐ฝ๐ต๐ ๐๐ผ๐ป๐ฐ๐น๐๐๐ถ๐ผ๐ป
This methodology isn't about guessing which stock will go up tomorrow. Itโs about identifying companies with a dominant position, smart management, and a financial structure that makes them virtually indestructible.
By filtering through these thresholds, we eliminate the noise and empty promises. We donโt invest in hope; we invest in metrics that prove a company has a durable competitive advantage. If the numbers meet these criteria, the stock price will eventually reflect the quality of the business. Investing this way requires patience and discipline, but itโs the only way to avoid becoming shark bait in the market.
