Wonderful stock

The basic criteria I always use in this stage are: Return on Equity > 15% Indicates high profitability and potentially a competitive advantage Debt-to-Equity ratio < 0.5 Implies that the company does not heavily depend on outside capital to finance its growth Current ratio > 2 Makes sure that the company is able to pay its short term obligations Sometimes I do add Dividend Yield > 1% as a criteria, because I like receiving a steady dividend income. Another criteria I sometimes filter on is Market Cap < 1 Billion, because smaller companies are generally less closely followed by analysts and therefore more likely to be mispriced. This theory is confirmed by Ibbotson Associates, who found that Small Cap stocks significantly outperformed Large Cap stocks over the past century.

by Saintl