We like companies with a defendable niche and enjoy a sustainable competitive advantage? Companies that have shown 3 to 5+ years of strong earnings, above average return on shareholders equity and improving profit margins also attract us.
How much does the company need to spend to maintain current operations? Companies with modest capital needs and the freedom to adjust prices for inflation are important equity characteristics.
We appreciate effective management. How good are they at expanding operations, reinvesting in future growth opportunities, making smart acquisitions, or repurchasing shares?
We also like companies that can fund their own growth. Companies with low debt levels and those that have abundant free cash flow meet that criteria.
Companies that have an attractive valuation relative to their growth rate, their peers and historic ratios are companies we seek out.