FAIRFAX WANNABES STOCK BUYING CRITERIA
To select the best stocks for our club, the stocks should meet at least 50% of our buy criteria:
Industry ranking preferable in the top third.
Timeliness and Safety ratings of 3 or higher
Total Debt of company is equal to no more than a third of their total assets.
P/E Ratio is at or below the average for the past
five years - Growth stock investing = buy stock where P/E is about ½ the expected
earning growth rate.
Upside-Down Ratio is at least 3 to 1
Zoning is in the "buy" range
Financial Rating is B+ or better
Stock has five or more years of history with above average growth
(usually in double digits) in sales and earning.
Combined sales and earnings are projected to grow by double
digits in the next few years - the sales of a small company should be
projected to grow 12-15% or even more; a medium company should grow 10-12%;
7-10% is a good rate for a large established company.
Management has a solid track record - should be in control
of any problems and engaged in adequate planning for the
future e.g. increased volume and low cost production, strong sales and
distribution capability, effectiveness in developing new products.
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