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Brian Feroldi Profile picture
@BrianFeroldi
Jun 14, 2021 • 17 tweets • 7 min read • Read on X
Scrolly
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?

I tweet about money, investing, & self-improvement.

Follow me @brianferoldi

You may also enjoy my other threads

Want to learn how to find businesses like these and screen them for quality?

Subscribe to my YouTube channel

youtube.com/brianferoldiyt
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

Brian Feroldi Profile picture
Apr 20
I've been investing for 21 years.

Here are 21 lessons I've had to learn the hard way.

1/ You’re going to be wrong. A lot. Image
2/ Consistently avoiding ruin is the most underrated financial skill.

3/ The desire to hold a loser until you “break even” is incredibly strong.

4/ When prices are rising, investors wish for a bear market. When a bear market appears, investors wish for it to end.
5/ The biggest factor that will impact your returns is your holding period.

6/ Panic selling once can destroy years of good decisions in seconds.

7/ Losing money hurts three times more than making money feels good.

8/ Interest rates matter. A lot.
Read 8 tweets
Brian Feroldi Profile picture
Apr 19
10 powerful visuals every investor should memorize:

1: Dollar-cost averaging makes market timing irrelevant. Image
2: Cash is short-term safe but long-term risky.

Stocks are short-term risky but long-term safe. Image
3: Expect the market to play all kinds of mind tricks on your emotions: Image
Read 12 tweets
Brian Feroldi Profile picture
Apr 18
Revenue and income are NOT the same things

Costs and expenses are NOT the same things

Net income and free cash flow are NOT the same things

Confused? Let me break it down for you: Costs vs expenses
Sales and revenue mean the same things.

Both are the money that comes in from customer payments.

They both refer to the “top line” of the income statement. Image
Orders and sales are NOT the same things.

Orders are when a customer places a request for the future delivery of a product or service.

Orders become sales when the product is actually shipped, or the service is performed. Image
Read 10 tweets
Brian Feroldi Profile picture
Apr 17
The P/E ratio SUCKS.

It’s a flawed metric that deceives investors.

Here's exactly why the P/E ratio can be INCREDIBLY misleading (and what to use instead): Image
The P/E ratio's flaw is that the "earnings” can be misleading.

If “earnings” aren’t sustainable, or are artificially inflated/depressed, the P/E ratio will be wrong.

Here's all the reasons why that can happen...
1: Accrual Accounting

The GAAP income statement uses accrual accounting.

Accrual accounting is useful, but it’s basically an accountant’s opinion.

Here are some of the expenses that can cause “earnings” to be higher or lower than the actual cash flow of a business Image
Read 20 tweets
Brian Feroldi Profile picture
Apr 14
"Margin of Safety" by Seth Klarman is an incredible investing book.

But a used copy costs $1,200!

Here are 26 short investing lessons from this classic book (for free): Margin of Safety
1: Markets are volatile. Never invest unless you are sure a "margin of safety" exists.

2: Focus on the intrinsic value of an investment. Only act when there's a meaningful difference between value and price. Image
3: Focus on the downside first. Avoid taking big losses.

4: Disciplined analysis, thorough research, and a patient, long-term perspective lead to superior returns.

5: Value investing isn't easy. Expect long periods of underperformance.
Read 12 tweets
Brian Feroldi Profile picture
Apr 13
The Rule of 72 is the MOST IMPORTANT "mental math trick" for investors to know.

Here's how it works:
Humans tend to think *linearly*.

When we see a curve, we mentally approximate it by a straight line.

This helps us cope with changes in the world around us. Image
But in finance/investing, we need to think *exponentially*.

Money compounds.

Growth doesn't happen at a constant pace; it *accelerates* over time.
Read 16 tweets

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