The Value Companion is a tool we built to help us save time and give focused data for our value investment research, and includes several core tools and features our team now heavily rely on.
One of the core features of The Value Companion is its streamlined tooling for searching and finding stocks that meet your personal criteria – enabling you to focus just on investigating those stocks instead of spending hours and hours sifting through companies, only to find one in a hundred that is worth looking deeper into.
There are seven key data points we have filters for:
- Intrinsic value to price: one of the biggest data points, we want to be able to filter on how much greater the value is compared to the price.
- Debt to equity: while data to price is important, many of us don’t feel comfortable investing in a company with high amounts of debt!
- Current ratio: like debt to equity, most feel better knowing if a company has the ability to cover its current liabilities.
- Book value stability: while a company’s book value may have positive growth, that growth may be erratic, and if it isn’t stable we may have a harder time trusting a predictable growth pattern.
- Dividend stability: similar to the book value stability, but this tracks how stable a company’s dividend payments are.
- Return on equity: we all want to make sure we invest in companies that are generating a good profit – after all if it isn’t profitable, would it be a good investment?
- Dividend yield: another key metric that helps us determine the stock’s intrinsic value, and helps us see how much we might expect in dividends from a company.
There are also filters for the major sectors of industry. This allows us to search within industries we know well and can make better judgements on – a strategy Warren Buffet refers to as investing in his “circle of competence”
On top of that there’s an option to search U.S. stocks only. If we are more comfortable with and knowledgeable about American industry, then similar to searching specific sectors we may find American companies are the ones with our circle of competence, and may (or may not!) want to stick just to those.
We have found that these filters cover just about all our base criteria and have helped us pare down stocks to a very manageable list for us to further investigate. While a stock meeting all our base criteria may not be one we decide we want to invest in upon further investigation, it certainly cuts down on all the time we spend searching and saves us hours (if not days) looking for stocks that are even worth researching.