One thing I have learnt from investing is that a cheap-looking stock is not necessarily a good investment. I need to understand what I am paying for and whether the company has a sustainable competitive advantage.
π 1. Financial Ratios Matter
I look at ROE, P/E and dividend payout ratios. A high ROE looks attractive, but I also need to check whether the company is using excessive debt to generate those returns. For P/E, I prefer comparing the valuation against its own historical range rather than simply comparing it with competitors.
π° 2. Dividend Consistency
I like companies that can consistently reward shareholders. However, a high dividend yield alone is not enough. I need to examine earnings, cash flow and payout ratios to determine whether the dividend is sustainable.
π° 3. Economic Moats
My favourite businesses
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