The differences among companies and their product quality gets more opaque by the day. Most of the top notch companies and their products, whether it be autos or camping gear or clothing or others just years ago now produce cheaper products of much lesser quality. You really have to constantly research to find the very few companies and good quality products. I know probably less than a dozen companies on a global scale that did not succumb to pure greed but instead adhere to their company policy to produce top notch products. All others worship shareholders and their product quality goes to shit over time.
Do these companies have stocks that produce above average returns? As an investor I suppose you want a company that is consistant. As a speculator I want a company that is hyped and produces spectacular returns in the short term. I rarely look at fundamentals because in the short term they don't move the stock price. Sure news will cause the price to move but you never know which way. It's how the institutions percieve the news that moves a stock price.
https://www.stockopedia.com/content...ll-10-useful-rules-for-stock-selection-64001/ Benjamin Graham's Last Will: 10 Useful Rules for Stock Selection We've discussed in the past some of the more familiar value/bargain screening criteria that can be derived from Benjamin Graham's earlier work, e.g the NCAV and Enterprising Investor Screens. What may be less known to you, though, is some quantitative work that Graham did towards just before his death (known as his "Last Will") with the help of a aeronautical engineeer James Rea, where he first identified the 10 best-performing stock selection criteria and then apparently distilled them into the 3 most important criteria. Background It seems that, upon reading an article that Graham had written for Barron's—“Renaissance of Value"— Rea forwarded some of his quantitative/screening research to Graham. This led to a three-year working relationship before Graham died, which culminated in two articles, one by Rea and one by Blustein (for Forbes) where they set out the findings of the research based on 50 years of back-testing as to the most effective value screening criteria for the US market. Benjamin Graham's 10 Rules for Stock Selection Here's the list that Graham came up with. The idea behind the rules is that the first five measure "reward" (by pinpointing a low price in relation to key operating results like earnings) and the second five "risk" (by measuring financial soundness and stability of earnings). An earnings-to-price yield at least twice the AAA bond rate P/E ratio less than 40% of the highest P/E ratio the stock had over the past 5 years Dividend yield of at least 2/3 the AAA bond yield Stock price below 2/3 of tangible book value per share Stock price below 2/3 of Net Current Asset Value Total debt less than book value Current ratio great than 2 Total debt less than 2 times Net Current Asset Value Earnings growth of prior 10 years at least at a 7% annual compound rate Stability of growth of earnings in that no more than 2 declines of 5% or more in year end earnings in the prior ten years are permissible. Unfortunately, the issue with these criteria is that, if all 10 are used, the criteria are just too onerous and are unlikely to result in a meaningful number of picks, especially with changing market conditions and business practices over time. The question which Graham and Rea explored is whether certain criteria can be preferred over others? Geraldine Weiss's investment strategy https://en.wikipedia.org/wiki/Geraldine_Weiss Weiss's investment strategy looks closely at a dividend's yield to determine value – a repetitively high yield would indicate an undervalued stock and a repetitively low yield would indicate an overvalued stock. Weiss has seven criteria to screen stocks with:[16] Whether the dividend yield is undervalued on a historical basis; Whether the company has raised dividends at an annual compound rate of at least 10% in the past 12 years; Whether the company is trading at a book value (BV) of two or less; Whether the company has a P/E ratio of 20-to-1 or less; Whether the dividend payout ratio is 50% or less; Whether the debt is 50% or less of the company's total market capitalization; Whether it meets the six blue chip criteria:[7][16] (1) Dividends have been raised at least 5 times in the last 12 years, (2) has at least an "A" rating from S&P, (3) has at least 5 million shares outstanding, (4) has at least 80 institutional investors that hold the stock, (5) has at least 25 years of consistent dividends, and (6) has shown earnings improvement at least seven times in the last 12 years. When a stock meets all seven of Weiss's criteria, the stock is categorized by Weiss as a "Buy".
Pricing power is a fundamental often overlooked. Can the company raise prices without a setback in demand. I believe warren Buffett looks at this.