Phil Fisher's Investment Checklist: 15 Things to Look For In A Stock ~ market folly

Tuesday, April 4, 2017

Phil Fisher's Investment Checklist: 15 Things to Look For In A Stock

Phil Fisher was a noted investor who founded investment firm Fisher & Company back in 1931.  He was basically a pioneer in the field of growth investing by buying great companies at reasonable prices while focusing on the long-term.  He's also the author of the popular investing book, Common Stocks and Uncommon Profits.

In the book, Fisher outlined what he deemed to be 15 things that investors need to look for in a common stock.

Phil Fisher's Investment Checklist: 15 Things To Look For

1.  "Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years?"

2.  "Does the management have a determination to continue to develop products or processes that will still further increase total sales potentials when the growth potentials of currently attractive product lines have largely been exploited?"

3.  "How effective are the company's research and development efforts in relation to its size?"

4.  "Does the company have an above-average sales organization?"

5.  "Does the company have a worthwhile profit margin?"

6.  "What is the company doing to maintain or improve profit margins?"

7.  "Does the company have outstanding labor and personnel relations?"

8.  "Does the company have outstanding executive relations?"

9.  "Does the company have depth to its management?"

10.  "How good are the company's cost analysis and accounting controls?"

11.  "Are there other aspects of the business, somewhat peculiar to the industry involved, which will give the investor important clues as to how outstanding the company may be in relation to its competition?"

12.  "Does the company have a short-range or long-range outlook in regard to profits?"

13.  "In the foreseeable future will the growth of the company require sufficient equity financing so that the larger number of shares then outstanding will largely cancel the existing stockholders' benefit from this anticipated growth?"

14.  "Does the management talk freely to investors about its affairs when things are going well but 'clam up' when troubles and disappointments occur?"

15.  "Does the company have a management of unquestionable integrity?"

If you want to explore the usage of checklists further, many investors have recommended Atul Gawande's book, The Checklist Manifesto.  While it's not an investing book, it is about incorporating checklists into your process.

For guidance from other prominent investors, be sure to also check out Viking Global's Andreas Halvorsen on investment process as well as Fairholme Capital's Bruce Berkowitz investment checklist.

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