Quality according to AlleAktien quality score
These four characteristics define the quality of a company: Growth, risk, profitability and valuation. These characteristics are measured by 10 quality criteria. If a company fulfills 9-10 of these criteria, it is a quality company.
- sales growth 10Y > 5% p.a.
- sales growth in the next 3 years (expectations) > 5% p.a.
- EBIT growth 10Y > 5% p.a.
- EBIT growth in the next 3 years (expectations) > 5% p.a.
- debt < 4x EBIT
- profit continuity 10Y
- EBIT drawdown 10Y < -50%
- return on equity > 15%
- ROCE > 15%
- expected return > 10%
Undervaluation
Comparison of the current and past P/E ratios of a share. If the current P/E ratio is below the historical average, which is considered to be the fair valuation, a share is considered to be cheap.
It is important to compare the current and expected development of the company - a lower P/E ratio can also be justified.
Long-term nature
Nobody can predict the future with certainty - especially short-term and short-term price fluctuations. I therefore assume average annual growth over more than 10 years for the expected return.
Volume of individual investments
In order to remain rational despite good investments and to diversify and minimize risk, I only invest volumes of between €1000-2000 per investment.
Short-term profit taking
In fortunate cases where share prices grow much more strongly than forecast and are heavily overvalued or I need money for other investments, I realize partial profits. Prices have at least doubled and I sell less than half of my shares. Fortunately, more often than one might expect - examples of such investments in my past include Tesla, NVIDIA, Netflix, Meta.
Tools
AlleAktien - Pool of professional company analyses
Eulerpool - tool for analyzing the business figures of listed companies
Portfolio performance - tool for monitoring the performance of your own portfolio