Analyzing the Gross Profit Margin
Reading the financial statements may be daunting for beiginners. This post will bring you through revenue, cost of goods and gross profit with case studies such as Costco, L Brands,…
Operating Leverage – How It Caused GameStop (GME) to Plunge into the Red
Operating leverage is a measurement of how an additional dollar of sales translates into operating profit. A 10% increase in sales may result in a 30% increase in net profits….
Focus on Total Returns, Not Income Investing
The desperate search for yield has led to a number of people choosing to invest in income funds, or in mature companies providing a high dividend yield. On the surface,…
Figuring out a Company’s Intrinsic Value with PE Ratio
The price-earnings (P/E) multiple has been one of the most popular tool analysts use to value stocks. A company trading at 10x P/E implies that investors are willing to pay…
What Makes Mastercard a Compounding Machine?
Investors who held Mastercard for the past 10 years, have been rewarded handsomely with a 27.4% returns compounded annually. A $10,000 investment would have returned approximately $113,000 over this period….
My Key Takeaway from Berkshire’s AGM 2020
Warren Buffett started the Annual General Meeting (AGM) with a seemingly bullish stance, diving into America’s history and how it always emerged stronger. Despite painting a rosy image, it is…
Facebook’s Q1’20 Earnings Update
Increased engagement due to shelter-in-place measures but some of this increased engagement will be lost once measures are relaxed in the future. Engagement increased by ~10% YOY across all measurements,…
Has the Market Bottomed Out?
It is important to understand that the intrinsic value of a business is the present value of all the cash generated over its lifetime. And most would agree that COVID-19…
How to Identify Companies that Will Emerge Stronger after COVID-19
Since COVID-19 caused countries to go into lockdown, we have seen the conversation amongst investors shift abruptly from a company’s growth prospects to, “How long can they survive without revenue…
How Ferrari Delivered Outsized Returns for Investors with Its Economic Moat
The moat surrounded Ferrari has proven to benefit investors immensely. Since its spin-off in 2016, it has delivered a CAGR of 37.3%, delivering a 400% return prior to Covid-19 within…
How to Invest Better during Market Crashes
“Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum…
Facebook’s Incredible Business Model – Part II
In the second part of Facebook’s write-up, we will examine how its moat enables it to generate a high Return on Invested Capital (ROIC). We will also discuss its growth…