Investing Criteria

Rational assessment of businesses.
company is a cash-generating, industry-dominating, wealth-creating powerhouse — what we call a Rule Maker.
We’ve identified 11 general attributes of Rule-Making companies. Part 1 covers five qualitative aspects of a business. For each of these, the scoring is simple — 1 point if the attribute is met, 0 points if it’s not. Part 2 covers six financial criteria. Since these are more objective, each is worth 2 points if met, 0 points if not. Altogether, that’s 17 possible points. Got it? If so, pick a company to analyze and let’s get started!
*Note* Rule Maker analysis is primarily for companies with at least $1 Billion in annual sales.
Part 1: Evaluating the Biz Answer honestly! It’s either 100% yes, or else no.
1) Dominant Brand — Is the company the standout category king within its industry?
2) Repeat Purchases — Do customers return for purchase at least once a month?
3) Convenience — Within its industry, is the company’s product/service accessibility and convenience the best?
4) Expanding Possibilities — Can you answer “yes” to the following two questions?
a) Do your friends know about and use the product/service?
b) Is worldwide expansion believable for their stuff?
5) Your Familiarity & Interest — Are you a user of the company’s products or at least very familiar with them?
Part 2: Company Financials Fill in the cells outlined in blue. The spreadsheet will crunch the numbers.
*Important Note* — When evaluating quarterly (10-Q) results, use the year-to-date income statement data.
For example, if a company is 3/4 of the way through its fiscal year, use the full 9 months of info.
10Q Report

Similar Posts