1 — MOAT · Will it still be winning in 10 years? · 30 pts
Will it still be winning in 10 years?
Pricing power: can it raise prices without losing customers?
High switching costs or network effects?
Hard and expensive for a competitor to replicate?
2 — MANAGEMENT · Would you trust them with your money? · 20 pts
Would you trust them with your money?
Meaningful insider ownership (skin in the game)?
Rational capital allocation — no empire-building, buybacks below intrinsic value?
Clean accounting and honest communication?
3 — FINANCIAL HEALTH · Can it survive a bad stretch? · 25 pts
Can it survive a bad stretch?
Consistent free cash flow?
Debt manageable — interest covered several times over?
High returns on capital, year after year?
4 — VALUATION · Are you paying a fair price? · 25 pts
Are you paying a fair price?
Buying below your estimate of intrinsic value?
Margin of safety — room to be wrong?
Would you still buy if the stock did nothing for 3 years?
INSTANT FAIL
Any one of these caps the stock at 49/100, no matter how strong the rest looks: accounting manipulation · management integrity issues · structural industry decline · debt distress · excessive customer concentration
The Iowa Investor · iowainvestor.com
For educational purposes only. Not investment advice.