Welcome to #individualinvestor!
I've recently decided to start a Rule 1 Investing project. In this episode, I'd like to share with you all the tools that you can use to find potential candidate #stocks that fit the criteria explained in the book by looking at a Rule 1 analysis of the Taiwan Semiconductor Manufacturing Company (ticker TSM).
In summary you can follow the approach below:
To find out some of the Four Ms, use Morningstar Stock Screener for stocks with with a Wide Moat and Exemplary Capital Allocation. This is the first step to find company with good management. This gives you 2 out of the 4 Ms.
On top of reading 10-K reports and investor presentations, use Morningstar to read analyst reports to understand more about the company, their performance outlook and risk.
You can also use Morningstar to find all the Big Five numbers for the last 10 years under the sections Operating Performance., Valuation(Growth) and Financials (Balance Sheet)
Moving into sticker price calculation, you will need the expected EPS growth in the next 10 years. You can go into the Detailed Earnings Estimates on Zacks and Growth Estimates under Analysis on Yahoo Finance. These figures will give you estimates for the next 5 years though, so you will have to use your research to determine if the figure from the analysts will be sustainable. With this you will get the 3rd M, Margin of Safety, by halving the sticker price.
Finally, for the Three Tools (MACD, Stochastic and Moving Average) you can use Tradingview.
Please remember, one of the most important principles of Rule 1 and investing in general is the remaining M, which stands for Meaning. You have to invest in companies that mean something to you.
Link to the spreadsheet: [ Ссылка ]
I hope you guys find this video useful. Please leave any comments below if you are also building a Rule 1 portfolio, would love to see your ideas!
#finance
#investing
