I can only tell you what my criteria is.
Divide the operating earnings, or EBITDA, by the stock’s market cap. The sum should be at least 15%. If it is not then move on.
The dividend yield must be at least 3.5% with a long history of growth before, not after, I buy a single share.
average aggregate net earnings over the last 5 years must not exceed a p/e multiple of 12.
Shares outstanding should be shrinking, rather than growing.
The business must have pricing power, devote a major portion of its revenue to research and development, have a healthy profit margin and show top line growth.
Finally, stay far away from businesses which you do not understand, do not believe in, or, are not intimately familiar. This will eliminate the vast majority of stocks….as it should.
All of this led me to add to my Harley Davidson position at a market price of 36.60 this year. It is a stock I have been holding for almost thirteen consecutive years, thus you could say I already had a good “feel” for it, having ridden the stock down from 62 to 8 between 2006–2009, then buying as much as I could afford during the years of 2009–2010. Then riding the stock all the way back up to the low 70’s between 2009–2015, then back down again to 31 between 2015–2018 before adding to it, once again, at 36 a few months ago.
I’m not sure what my cost basis is anymore but if I had to guess I would say it’s now in the low 30’s. I currently hold 1,456 shares of HOG stock, it closed Friday over 40 and some change.
You do the math on what it’s worth.
Now you, the reader, know, or should know, that the term “buying point” is laughable. There is no such thing. Put that nonsense in your pipe and smoke it. Ugly truth be told? The stock market is volatile. Individual stocks are even MORE volatile. Embrace, rather than whither away from this irrefutable fact.
Otherwise the stock market will soon make a fool out of you and your money.
I am also very familiar with the HD brand as I’ve been riding for over 15 years, have trained side by side with motor police officers, have logged well over 100,000 miles on its products, have personally bought and sold 4 bikes, am also a HOG member, attended the 115th anniversary last year and will be attending the annual shareholder’s meeting this year.
Hope this was helpful.
Good luck.
