Price. The price should be at a good level considering the business value (financials, products, etc.) of a company.
Earnings growth. Your reasonable estimates for growth should be one that over the long-term would provide a nice return on your investment (this is where the Future Value technique comes in).
Niche. A company must have a niche in its market, otherwise it is very difficult to survive in the long run.
Common products. I believe it is the companies with common (and, preferably, simple) products that make great long-term investments, as long as it fits the bill with the other "pencils" letters.
Intelligent leaders. Without intelligent management, you won't feel comfortable investing in a company.
Long-term prospects. Investing is all about the long-term. If the long-term prospects aren't there, neither should your investing money.
Secure financially. Financial security is key for a company's long-term success, because it is what allows a company to take advantage of growth opportunities. (This, of course, is assuming it isn't in a turnaround situation, special situation, etc.)
Price
Earnings growth
Niche
Common product
Intelligent leaders
Long-term prospects
Secure financially
I believe companies with the PENCILS characteristics are among the top long-term investments out there. Really, all you need is to find some companies that have all the PENCILS charicteristics, except price, and wait for a downfall. The PENCILS strategy is all about finding great, well-run companies that are at great prices.
Tags:
business, investment, pencils, pencils fund, stocks, strategy
Posted at: 12:33 PM | Add Comment
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