Quality Tuesday
It’s #QualityTuesday!
In this series, we will teach you 5 things about the stock market in less than 5 minutes.
1️⃣ Wonderful companies at a fair price
As a quality investor, you want to buy wonderful companies at a fair price.
Does this strategy work? YES.
Between 1990 and 2021, QARP (Quality At Reasonable Price) managed to outperform the index by 7.4% (!) per year.
2️⃣ Bullsh*t earnings
Never look at the adjusted EBITDA of a company. Management can fool you with this metric.
Charlie Munger even goes one step further. He stated that every time you see the word EBITDA, you should replace it with bullsh*t earnings.
In the end, free cash flow per share growth is all what matters.
![No alternative text description for this image No alternative text description for this image](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F36f51883-c719-4b7c-9e96-97fd06a9f94d_800x564.jpeg)
3️⃣ One simple investment quote
As an investor, you are the owner of the companies you invest in. Act like it.
“Stocks aren’t lottery tickets. There’s a company attached to every share.” – Peter Lynch
4️⃣ TED Talks
TED Talks are a great way to learn about any subject.
Here are 8 great TED Talks about money and investing:
![Twitter avatar for @QCompounding](https://substackcdn.com/image/twitter_name/w_96/QCompounding.jpg)
5️⃣ Example of a Quality Company
Garmin provides navigation, communications, and information devices. The company’s key focus is on GPS-enblad products. Think about GPS products for marine, aviation and fitness markets.
Profit Margin: 21.7%
ROIC: 16.9%
Earnings Yield: 5.1%
Exp. yearly EPS Growth (3 yr): 4.8%
Insider ownership: 20.0%
More articles from Compounding Quality
Do you want to read more? Here are our 5 latest articles:
Contact details
Do you want to read more from us? Please subscribe to our Substack where we provide investors with investment insights on a weekly basis.
If you have any suggestions to further improve our posts, or do you want certain topics to be covered? Send us an email:
About the author
Compounding Quality is a professional investor which manages a worldwide equity fund with more than $150 million in Assets Under Management. We have read over 500 investment books and spend more than 50 hours per week researching stocks.
“It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” Always a great quote
Great once again. What’s the second largest bullsh*t term, then? 😉