“A great company is not a great investment if you pay too much for the stock.” – Benjamin Graham
I love cheap stocks, and if the company is also good, that’s even better. Once I finished valuing Berkshire Hathaway, I needed to find companies to research next, so I decided to use a share screener to search for companies that fulfill my three main biases:
- I hate debt;
- I like dividends;
- I love discounts.
The Financial Times has a great equity screener available on their website which lets you use dozens of criteria such as country, sector & industry, and equity attributes like valuation multiples, growth rates, management effectiveness, financial strength, margins, growth, price and others (you can even use predefined Warren Buffett and Benjamin Graham screens):
I selected only the following three equity attributes (to match my biases):
- Total debt to capital: less than 25%;
- Dividend yield: greater than 5%;
- Price to cash flow: less than 5 (for a cash flow yield of 20% per year).
Besides the above criteria, I also selected specific countries to invest in, simply because my Investment ISA is with TD Direct and their platform only allows me to buy shares from the following:
- Europe: Belgium, France, Germany, Ireland, Italy, Netherlands, Spain, United Kingdom;
- Americas: Canada, United States;
- Asia-Pacific: Australia, Hong Kong, Singapore.
This screen returned a list of 50 companies, and I will be posting my thoughts on each company’s latest annual report for the next few months.