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?

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

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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

Sep 6
Tangible vs Intangible Assets.

What's the difference?

Here's everything you need to know: Image
They confused me until I discovered an easy way to distinguish them:

𝗧𝗮𝗻𝗴𝗶𝗯𝗹𝗲 𝗔𝘀𝘀𝗲𝘁𝘀 𝗖𝗮𝗻 𝗕𝗲 𝗧𝗼𝘂𝗰𝗵𝗲𝗱

𝗜𝗻𝘁𝗮𝗻𝗴𝗶𝗯𝗹𝗲 𝗔𝘀𝘀𝗲𝘁𝘀 𝗖𝗮𝗻'𝘁 Image
Another major difference.

- Tangible assets are depreciated

- Intangible assets are amortized Image
Read 6 tweets
Aug 31
How to analyze an Income Statement, FAST.

Warren Buffett’s 8 Income Statement 'Rules of Thumb': Image
1: Gross Margin

🧮 Equation: Gross Profit / Revenue

👍 Rule of Thumb: 40% or higher

🤔 Buffett's Logic: A consistently high gross margin signals that the company isn’t competing exclusively on price. Image
2: SG&A Margin

🧮 Equation: SG&A Expense / Gross Profit

👍 Rule of Thumb: 30% or lower

🤔 Buffett's Logic: Wide-moat companies don’t need to spend a lot on overhead to operate & convince consumers to buy. Image
Read 11 tweets
Aug 30
Some stocks are STRONG BUYS when they fall

Other stocks are SELLS when they fall

How can you tell the difference?

Watch for these 5 financial yellow flags: Image
1) GOODWILL WRITEDOWN

This represents the premium a company pays for an acquisition above its fair market value.

If there’s a major goodwill write-down on the Income Statement, it means management has wasted a TON of capital. Image
2) GROSS MARGIN DECLINING

1: The competition is forcing me to lower prices
2: Demand is weak
3: My suppliers are raising prices

Either way, it can be a thesis-busting development Image
Read 9 tweets
Aug 29
Capitalism is brutal.

If you invest, you MUST know how to identify a moat.

Here are 9 financial “rules of thumb” that Warren Buffett uses to tell if a company has one: Image
1: Gross Margin

Found: Income Statement

Formula: Gross Profit / Revenue

Moat: Consistently above 40%

No Moat: Under 40% & volatile Image
Buffett’s logic:

A consistently high gross margin signals that the company isn’t competing exclusively on price.

A high gross margin also provides ample gross profit to pay expenses and leaves money for shareholders.
Read 22 tweets
Aug 27
How to analyze an income statement in less than 2 minutes: Image
The income sheet is one of the three major financial statements.

It shows a company’s:
▪️Revenue (Sales)
▪️Expenditures (Costs / Expenses)
▪️Net Income (Earnings, Profits)

Over a period of time. Image
Management teams have leeway in categorizing their income statement.

This means that not all income statements look the same.

Here is a typical layout and the meaning of the most commonly used terms: Image
Read 11 tweets
Aug 26
Financial Statements For Beginners

Want to learn accounting?

Study these 9 simple infographics (a visual thread) ↓ Image
Image
Financial Statements DO NOT have a universal layout

Here are some other balance sheet terms you might see: Image
Read 9 tweets

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