Rules of Investing - How to Check Undervalue Stock

Rules of Investing

1. Understand the business
2. Will people continue to use the product in 20 years? Stock must have long term prospects.
3. A stock must be managed by vigilant leaders.
4. Does the company have a low-cost durable (lasting) competitive advantage?
5. Is the company recession proof?
6. Has the company had consistent earnings growth? Generally the EPS growth must be at least 8%
7. Growing sales.
8. Has the company had consistent dividend growth? Generally the dividend growth must be at least 8%.
9. Does the company have a low payout ratio? Must be 75% or less.
10. Is the company cash rich?
11. Does the company have low debt? Must be less than 70%.
12. Does the company have a good credit rating? Must have a min S&P Credit Rating of “BBB+”.
13. Does the company actively buy back its shares? (optional)
14. Is the stock undervalued? 
1. The P/E Ratio must be 25 or below.
2. Is the current dividend yield higher than the average dividend yield of 5 years?
3. The P/B Ratio should be 3 or less
15. Keep emotion out of investing.
1. Discipline and patience are the keys to successful investing.

https://www.youtube.com/watch?v=QNEGxb4BMxI