1/ Phil Fisher's 15 points to look for in potential investments, from the classic investment book, COMMON STOCKS AND UNCOMMON PROFITS.
Point #5: Does the company have a worthwhile profit margin?
Point #5: Does the company have a worthwhile profit margin?
2/ As investors, we pay attention to a lot of things -- macro trends, total addressable market, user engagement/growth, etc. -- but we can't let all of these important things distract us from the most important thing: profits! A company must have a path to profit growth!
3/ High profit margins and long-term profit growth are found in the best companies, so be careful about wasting your time/money w/mediocre companies. The only exception to this rule is if there are companies undergoing a transformation.
4/ But what about those fast-growing SaaS companies?!?
Fisher notes that there will be young companies that often forgo profits for a time to speed up sales/product development. Just make sure these efforts are worth it and will actually lead to future profit growth!
Fisher notes that there will be young companies that often forgo profits for a time to speed up sales/product development. Just make sure these efforts are worth it and will actually lead to future profit growth!
5/ When you have a young, fast-growing company forgoing profits now for future profit growth, it can make for an unusually attractive investment. Besides these few cases, Fisher advises to look for companies w/ high profit margins and a long runway of profitable growth ahead.
