Struggling to come up with ideas? I’m copying Warren Buffett’s approach – Yahoo Finance UK

Everything you need to know about buying property abroad
As I’ve been building my portfolio over the years, I have found it difficult to think of new investment ideas. I often experiment with new strategies, filters, and techniques, yet there are times when my mind is blank. In those circumstances, I tend to turn to the investors that first inspired me. Trying to follow the approach of history’s greatest investors allows me to come up with new opportunities, and get back on track.
In this instance, I have decided to once again come back to the legendary value investor, Warren Buffett. He is one of the most successful investors of all time, and after amassing a fortune of over $100 billion, it isn’t hard to see why. Despite this success, Buffett’s main investment strategy is quite simple. He is an advocate for buying cheap stocks, holding these for the long term, and steadily growing the position until the market prices the company correctly.
Of course, this is an oversimplification, and finding the right opportunity does take time. I like to think of it in a similar way to fishing, and how a core part of that activity is the waiting. When applied to investing, I use an index filter to scan for the potential opportunity, then sit back and wait until I get a ‘bite’. This approach does require a lot of discipline and patience. I want to wait for the wider market to neglect a great company, as this will allow me to buy it for a discounted price.
A prime example of this style is Future (LSE: FUTR), a media and publishing company. This is a stock that has performed fantastically over the last few years, frequently achieving triple-digit returns. But in 2022 things appear to have changed, with the share price down 64%. This is a big change to the 120.4% return achieved in 2021 and has resulted in a price-to-earnings (P/E) ratio of just 10.4.
Despite this considerable correction, the underlying fundamentals are very impressive. Profit margins, cash generation, and return on capital employed (ROCE) are all exceeding their three-year averages. Also, the forecast performance is extremely encouraging, with turnover expected to increase by 35%, and bottom-line profits by almost 90%. These strong characteristics are certainly not being reflected in the share price, given the reversal this year.
It is important for me to not overlook some of the less appealing factors. The level of debt has increased significantly, reaching 33% of market capitalisation. This is much higher than the three-year average of just 5.4%. Also, the current dividend yield of 0.2% is not particularly enticing, even when factoring in the expected dividend growth of around 18% in 2023.
Nonetheless, I think Future represents a typical Buffett-style investment. It is a company with strong fundamentals, and a reasonable valuation, which is currently being ignored by the wider market. For that reason, I would be keen to add the company to my portfolio once I get the necessary funds.
The post Struggling to come up with ideas? I’m copying Warren Buffett’s approach appeared first on The Motley Fool UK.
More reading
5 Stocks For Trying To Build Wealth After 50
6 Shares That Could Be The Biggest Winners Of The Stock Market Crash
Gabriel McKeown has no position in any of the shares mentioned. The Motley Fool UK has recommended Future. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2022
Ellington Financial Inc. ( NYSE:EFC ) shareholders should be happy to see the share price up 23% in the last month. But…
Heritage-Crystal Clean, Inc ( NASDAQ:HCCI ) shareholders might be concerned after seeing the share price drop 17% in…
A BRAND new block of apartments with views out across Poole Bay has gone on the market for just shy of £20million.
Jon Smith reveals his favourite investment ideas for next year, focusing on what's hot now and what could do well in 2023. The post 4 of the smartest stock market investment ideas I have right now appeared first on The Motley Fool UK.
Bitcoin (BTC) and other cryptocurrencies sharply fell on the news that troubled crypto exchange FTX is filing for bankruptcy and CEO Sam Bankman-Fried is resigning from the company. FTX US also froze crypto withdrawals, sending millions in assets to bankruptcy limbo. "All About Bitcoin" host Christine Lee breaks down the Chart of the Day.
By investing his Stocks and Shares ISA in this way, our writer hopes he can set up enduring income streams without working for them. The post I’d invest £20,000 in a Stocks and Shares ISA like this to earn passive income for life appeared first on The Motley Fool UK.
After losing nearly three-quarters of its value in a year, does the Aston Martin share price now make the stock a possible bargain for our writer's portfolio? The post Down 74%, is the Aston Martin share price worth a nibble? appeared first on The Motley Fool UK.
The Oracle of Omaha never saw a future in cryptocurrency.
Yahoo Finance’s Ines Ferre joins the Live show to break down how indices and sectors are moving in the final hour.
International exchange for crypto assets is in effect unregulated – and may have been built on sand
Wednesday, in what in hindsight should be obvious, Binance pulled out of a tentative deal to buy out rival FTX, the crypto exchange founded by Sam Bankman-Fried that has lost just about everything following a bank run. Binance CEO Changpeng Zhao said after a preliminary review of FTX’s books that the risks were too big, the holes in the exchange’s balance sheet too large and the loss of investors’ confidence “severe.” On Twitter, Bankman-Fried said he’d do what he can to shore up users’ losses before reimbursing investors, in part by “winding down” his hedge fund Alameda Research.
Today’s figures on the performance of our Income Portfolio, published in the table below, do not make for especially comforting reading, although the pattern we have noted before – a fall in capital values combined with a higher and reliable income – remains. As income is what the portfolio is for, there is comfort here.
Lloyds shares have gone nowhere for a decade, but they're cheap and offer a high and rising dividend yield. I'm thinking of buying. The post Should I buy Lloyds shares? appeared first on The Motley Fool UK.
Research from Saxo shows house prices in the stockbroker belt are rising faster than inside London
Elon Musk has insisted his plans for Twitter are “proceeding well” amid chaos at the social network. Asked by another Twitter user how many people had signed up for that subscription, Mr Musk did not give any numbers but suggested that it was going as planned. “Needs some tweaks, but overall proceeding well,” he wrote in a tweet.
Global Bioenergies renews equity line with Kepler Cheuvreux to support industrial deployment Evry, 11 November 2022 Global Bioenergies today announces the renewal of its equity line with Kepler Cheuvreux, a leading European financial services company acting as ISP1 as part of an underwriting agreement. This financing solution with Kepler Cheuvreux has already been a well-proven success for Global Bioenergies: the two-year contract signed in August 2020 raised €13.6 million and the valuation of G
The utility firm, which runs Britain's energy systems and also has businesses in the US, raised its full-year earnings growth forecast.
State-owned Italian bank Monte dei Paschi di Siena (MPS) said on Friday it had booked 925 million euros ($950 million) in charges relating to cutting nearly 20% of its staff, resulting in a 388 million euro third quarter loss. "We've been working since the very beginning to set up a … commercial plan to ensure full operational services and effective coverage of customers from day one," he told analysts.
Global Glucosamine Market 2022-2026 The analyst has been monitoring the glucosamine market and it is poised to grow by $244. 19 mn during 2022-2026, accelerating at a CAGR of 5. 75% during the forecast period.New York, Nov. 10, 2022 (GLOBE NEWSWIRE) — announces the release of the report "Global Glucosamine Market 2022-2026" – Our report on the glucosamine market provides a holistic analysis, market size and forecast, trends
British pharmaceuticals giant AstraZeneca on Thursday announced a return to third-quarter profit on increased revenue from sales of its drugs.


Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button