Basically, you should run filters such as growth evaluation, Graham's valuation equation, discount PE to sector, Buffet's financial safety (as mentioned), eliminate micro revenue and micro market cap companies, avoid upcoming surprises of results announcement, fundamental and technical risk management, etc.
That's a whole bunch of works to be done, and who says investment or trading is easy? A doctor or pilot takes 5 years to get a license, but an crafty investor/trader takes at least 10 years of mistakes and refinements to sharpen the skill.
anyway, so Price/FCF(TTM) is my final and ultimate test after the whole bunch of other things took place, i just make it simple for ya. As a guide, anything less than 2% of Price/FCF(TTM) considered a gem IMHO.
Sorry for replying late, cause this website's thread doesn't come with notification.
@BobbyAxelrod Just remember Buffet never sell during recession, and stock market is a leading indicator for recession, that makes u want to buy during recession. Many articles online already covered that. You can check out Pohkong and let me know what you think.
@Sslee My sole motivation is to share, not to prove anything or compete, this method works, my reward of portfolio gain is already enough, nothing i need to show the world but myself. Once you know your improvement metrics that could avoid pitfalls and filter all the junk (just like diet), your portfolio will grow (healthier).
8 reasons to buy a stock:
1. Strong financials with CR>1 and low debt D/E<1 2. Low positive P/FCF good cashflow 3. Best PE discount within it's sector's peers 4. Above industry's average ROE 5. Trading at great book value discount 6. Good QR performance with positive YOY & QoQ revenue & profit growth 7. Technically great Reward/Risk currently 8. Very low risk opportunity
If you see it, you see it. If you don't, you don't.