Brian Feroldi Profile picture
Jun 14, 2021 17 tweets 7 min read Read on X
High-return, low-risk stocks do exist

But many of them don't grab financial headlines

Here are 10 high-return, low-risk stocks (that most investors ignore):
What do I mean by “high-return”?

These stocks have CRUSHED the market:

📈Since IPO
📈Over the last 5 Years

They are all long-term winners that keep on winning
What do I mean by “low-risk”?

A combination of:

✅Financially Strong
✅Profitable
✅Consistent Organic Growth
✅High Returns On Capital
✅Wide moat
✅Great Management
✅Recurring Revenue
✅Diversified Customers/Suppliers
✅Low Disruption/Dilution/Volatility
1/ Accenture - $ACN

Consulting is BIG business and Accenture is the industry’s top dog

This company is so consistent that it’s boring to follow, but it’s worked out really well for shareholders
2/ Cintas - $CTAS

Managing employee uniforms is BORING

but this company sure does crank out consistent growth
3/ EPAM Systems - $EPAM

Need custom software? EPAM is the go-to choice for companies worldwide

Sticky clients, consistent growth, and founder-led!
4/ Intuit - $INTU

Tax software? Boring!

Payroll software? Boring

Budgeting software? Boring

But Intuit’s long-term returns sure haven’t been boring!
5/ Moody’s - $MCO

Rating bonds and providing financial data isn't an exciting business

But this business has a wide moat, is HIGHLY profitable, and has hugely rewarded shareholders
6/ MarketAxess - $MKTX

This platform allows bonds to be traded electronically

Boring? Yup!

But WOW is this a lucrative business
7/ Rollins - $ROL

Few investors dream about owning a pest control company

They might want to after they see Rollins’ consistent growth and great long-term returns
8/ Sherwin-Williams - $SHW

Buying a home? You need paint

Selling a home? You need paint

Remodeling a home? You need paint

No wonder this company’s growth is so consistent
9/ S&P Global - $SPGI

Another bond-ratings agency & financial analytics company

Boring? Yup! But a REALLY good business to be in
10/ Verisign - $VRSN

Domain name registration services? Boring!

But WOW has this been a great long-term investment
Enjoy this thread?

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Summary:

1: $ACN
2: $CTAS
3: $EPAM
4: $INTU
5: $MCO
6: $MKTX
7: $ROL
8: $SHW
9: $SPGI
10: $VRSN
Does a business have high return & low-risk potential?

Here's how to tell using $UPST as an example

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More from @BrianFeroldi

May 17
8 visuals every investor should memorize:

1: In the long run, stocks win: Image
2: You make far more money by holding through bull markets that you lose by holding through bear markets. Image
3: Investors are their own worst enemy.

Why do they underperform?

Their behavior. Image
Read 9 tweets
May 16
My worst investing decisions ever all contain the same word:

Sell

But that doesn't mean I "buy and forget"

Here are the exact reasons I will exit an investment: Image
1: Thesis Busted

Translation: I was wrong

This could be because:
▪️Brand deteriorated
▪️Management isn't executing
▪️I misjudged the moat
▪️Rising competition

If the original reasons I bought are no longer valid, I admit defeat and move on
2: Accounting Irregularities

If I can't trust the numbers, I'm out.

Accounting Irregularities = You are dead to me forever
Read 14 tweets
May 12
How to analyze an income statement, FAST.

Study these 7 infographics:

1: Income Statement Overview Image
2: Three Types of Analysis Image
3: Net Income vs Free Cash Flow Image
Read 8 tweets
May 11
The most powerful investing principles I've ever learned are counterintuitive.

That’s logical - if they were intuitive, I wouldn't need to learn them.

Here are 7 counterintuitive investing principles I had to learn the hard with (with visuals) Image
1: Don’t haggle

If a stock is trading at $21, I used to set a limit order for $20.50

But my orders usually didn't fill.

Haggling caused me not to BUY a few mega-winners.

Which is FAR MORE costly than slightly overpaying. Image
Think of it this way:

If stock checks all your boxes and goes from $20 to $200

Does it matter if you got in at $19.56 or $21.25?

If you think a stock has 10x potential from today's price, don’t haggle over pennies.

Just buy it.
Read 18 tweets
May 8
I bought my first stock 21 years ago.

Here are 21 harsh investing truths I learned the hard way:

1: The worst mistake is to sell a mega-winner early Image
2: Humans are pre-programmed to be bad at investing.

3: Your personal finances are 10x more important than your investments.

4: Handle volatility is 100x easier in theory than in reality.
5: Confidence in your strategy will rise and fall in lock-step with asset prices.

6: The best stocks put their owners through gut-wrenching volatility. The worst stocks do, too.

7: You're going to be wrong—a lot. Be humble.
Read 10 tweets
May 6
How to Read 10Ks Like a Hedge Fund

Here’s what metrics professional analysts focus on (using $MA as an example:) Image
1: Business overview.

Understand everything about how the business works, like:
- What is the business model?
- Who are the key suppliers, distributors, partners?
- Revenue quality?(Recurring? Recession proof?)
- What is the revenue split from products / services? Image
2: Risk Factors

Most of these are standard.

Identify the risks that are company-specific and make sure you understand them. Image
Read 14 tweets

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