Great Company + Strong Fundamental = Easy Win (好公司+强的基本面=赢面高)
What can be considered as a great company? A great company supposed to first have a good management team, where they are aggressive on achieving their targets and milestones. Furthermore, the management’s words should be convincing and confident when queried by shareholders, and this can boost the shareholders’ confidence by a lot. Besides, their business model should be one of their kind, where they do something unique as compared to their peers, hence gaining their own advantages and allowing themselves more space to grow in the future.
On the other hand, what can be considered as strong fundamental? This question is rather subjective, but for the writer, a strong fundamental means having a very healthy cash flow. Its operating cash flow must remain positive almost every quarter, and being a net cash company will be a bonus. Besides, the company should also have high ROE and profit margin, which makes them unbeatable from every aspect. PE wise, it is not so important for the writer, since the writer is more into technology stocks, which has very high PE ratio. However, out of so many high PE technology stock, the writer will prefer one of the lowest out of the pack.
Now combining these two elements, what can we get from it? From the big drop in March, we can see that great companies rebound to their previous high, and some even manage to break new high. Furthermore, great companies continued to be profitable even facing such high uncertainties, and continue to expand their businesses. Besides, when there were any corrections happened in the market, these great companies managed to drop only a little, but rebound the quickest.
In short, investing in great companies with strong fundamental is the go-to, for investors to secure their capital gain and able to be ease at their investment life.
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