Benjamin Graham, considered the father of value investing, put an emphasis on finding quality value stocks.
His studies found that the biggest peril of buying bargain stocks was settling for low quality companies that were unable to compete. He argued that finding quality stocks was the key to successful value investing.
Piotroski Score
Some analysts have chosen to use the Pitroski Score (to know more Read here) for a quality stock screen. The Piotroski Score concentrates on profitability, capital structure, and operating efficiency in evaluating the quality of a company.
Characteristics of Quality Stock are :
- Good Management
- Strong Balance Sheet
- Enterprise Life Cycle
- Economic Moat
- Earnings Stability
- Operating Efficiency
Quality Investing beats Index Returns by significant margin (past 10 year data)
(Source www.asiaindex.co.in)
Quality investing requires a different way of thinking.
Too many investors go for the volatile higher risk investments instead of the quality investments.
Investing is a marathon, not a sprint.
(Disclosure : For educational purposes only and not to solicit any business. Please be aware that stock market investing is a with risk investing including risk on the principal invested. Please take an informed decision)
