In his book Common Stocks and Uncommon Profits, Phil Fisher makes the point that it is not what is currently known about a company’s cash flow that matters, but rather, what comes to be known about a company’s profit potential in the years after we buy a given stock.
As Fisher says on page 64 of his book, “Some companies are in the seemingly fortunate position that they can maintain profit margins simply by raising prices. This is because they are in industries in which the demand for their products is abnormally strong or because the selling prices of competitive products have gone up even more than their own.”
This is why I love “indispensable products.” They have the ability to raise prices every year. As a customer, that sucks. As a part owner of a business, that is great. Your kid is going to eat cereal. That is … Read the rest of this article!
There is a financial sector stock that recently saw its stock price get clobbered in what might be an opportunity analogous to the oil sector opportunity to buy Royal Dutch Shell at a price of $37 per share two years ago back when the Shell management team stated that some of its proven reserves were being discounted.
Sometimes, a high-growth encounters a temporary setback that catches all of the headlines and punishes the valuation, creating a lucrative buying opportunity for those with cool heads who can appreciate profits on a balance sheet and can recognize growth even amidst pockets of unfavorable news.
The chef knows when his cooking is good, and if you’re not a subscriber on Patreon, I encourage you to do so now. The financial sector stock that I just covered is one of the best deals I have seen since we have entered this period of general … Read the rest of this article!