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Screen For Quality Stocks

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Screen for Quality Stocks : 

1- Revenue growth > 5%:
In the long term, revenue growth is the main driver for stock market returns.
Why? Because without top-line growth, a company can never grow its free cash flow per share at an attractive rate in the long term.

2- Earnings growth > 7%:
In the end, you want most sales to be translated into earnings.
Why? Because in the long-term stock prices always follow the underlying performance of the company.
You can calculate your return as an investor as follows:
Return = Earnings per share growth + Shareholder yield (Dividend yield + Buyback yield) +/- Multiple Expansion (Contraction)
If you don’t overpay for a company that can grow its earnings per share at attractive rates, you’ll do very well.
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” – Warren Buffett

3- FCF / earnings > 80%:
Companies that translate most earnings into free cash flow perform significantly better than companies which don’t.

4- ROIC > 15%:
For quality investors, Return on Invested Capital (ROIC) is one of the most important financial metrics.
It shows you how efficiently management is allocating capital.
Furthermore, a high and stable ROIC is a great way to look at a company’s competitive advantage.

5- Net debt / FCFF < 5:
You want to invest in companies which are in good financial shape.
A healthy balance sheet gives a company flexibility and protects them against unforeseen circumstances.
That’s why you would prefer to own companies which are able to pay down all their debt in at least 5 years.

6- Debt/equity < 80%:
Too much debt and leverage is never good.
If you’re smart you don’t need it and if you’re dumb you shouldn’t use it.

You can now benefit from LDN company’s services through the LDN Global Markets trading platform.

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