How To Find Great Stocks In 3 Steps In 2023

A Simple And Repeatable Process For Smart Investors

Excited to dive into the world of investing and find great stocks? You’re in luck! Today, we’ll show you how to do just that in just 5 minutes and 3 simple steps. And the best part? we’ll be using the free website, www.stockviz.com, to make it easy and fast.

1. First, we’ll head over to the Benchmark tab on StockViz to find quality growers
2. Then, we’ll quickly review their income statement, balance sheet, cash flows, and valuation metrics on the Statements tab
3. Finally, we’ll review its stock price and its price to earnings on the Valuations tab

With these 3 easy steps, you’ll be on your way to finding great stocks and making informed investment decisions. So, let’s get started!

Photo by Javier Esteban on Unsplash

Start by finding quality growers

Let’s head over to the Benchmark tab, where we’ll discover the four critical metrics that can help us identify top-performing stocks. These metrics will help us to zero in on stocks that have managed to:

1. Consistently grow their sales: This is a key indicator of a company’s financial health and future potential. By identifying stocks that have consistently grown their sales, we can spot companies that are poised for continued growth.
2. Achieve robust earnings growth: Earnings growth is another critical factor in determining the long-term potential of a company. Stocks that have consistently grown their earnings over time are often seen as attractive investments.
3. Maintain a positive EBITDA ratio: EBITDA, or earnings before interest, taxes, depreciation, and amortization, is a measure of a company’s operating performance. By identifying stocks that have a positive EBITDA ratio on average over the last three years, we can identify companies that are operating efficiently and effectively.
4. Trade at a low versus their 52-week high: This final metric helps us to spot stocks that are currently trading at a discount relative to their recent highs. By identifying such stocks, we can potentially identify buying opportunities.

As you can see on the Benchmark tab, these four metrics are crucial to identifying stocks that are likely to perform well over the long term. So let’s get started and find those top-performing stocks!

We’ve scoured the Benchmark tab to find stocks that exhibit above-average sales growth, EPS growth, and are trading at a relative low compared to their 52-week high. And after careful consideration, we’ve found a hidden gem: Danaher Corporation (DHR).

• This dynamic company has an impressive track record of growing its earnings per share by a remarkable 34% per year on average over the last three years.
• Moreover, it boasts an enviable free cash flow yield of 4%, which is a testament to its robust financial position.
• Although the price to earnings ratio is around 25, which is relatively higher, it is a small price to pay for quality.
• But that’s not all — Danaher Corporation has also managed to achieve significant sales growth of approximately 20% per year over the past three years, which is a promising sign of future potential.

Overall, Danaher Corporation stands out as a top-performing stock that is worth considering for long-term investment. Its impressive financial metrics and consistent growth make it a solid investment choice for those looking to make informed investment decisions.

Analyzing its financials in depth

To make informed investment decisions, it’s essential to carefully analyze a company’s historical financial data. Here are some critical areas to focus on:

• Revenue: Examining a company’s revenue growth over time is crucial in assessing its financial health and potential for future growth.
• Cost of revenue: Analyzing the cost of revenue and its trend over time can provide insights into a company’s cost structure and profitability.
• Operating expenses: Understanding a company’s operating expenses and their trend over time can help identify areas where the company may be able to reduce costs and improve profitability.
• Margins: Looking at a company’s gross, operating, and net margins can help determine its profitability and its ability to generate cash.
• Debt: Reviewing a company’s debt levels and how they have changed over time can help assess its financial risk and ability to manage debt.
• Cash flows: Analyzing a company’s cash flow statement can help identify how it generates and uses cash, which can provide valuable insights into its financial health and ability to fund growth.

What about Danaher Corporation?

Danaher Corporation’s sound financial position, sustainable growth trajectory, and strong competitive advantage make it a compelling investment opportunity. Let’s explore some of the key financial data that supports Danaher’s status as a strong company.

• Sales growth: The company has demonstrated impressive sales growth, with quarterly sales increasing from USD 3.9B in 2001 to USD 31B in 2023. This highlights the company’s ability to consistently grow its top line in a healthy manner while keeping its margins in check and shares count stable.
• Earnings per share: Danaher Corporation has also achieved remarkable earnings per share growth, increasing from a little under USD 0.6 to over USD 9.5 over time. This demonstrates the company’s ability to generate sustainable profits and create value for shareholders.
• Debt and cash flows: While the company has experienced an increase in net debt over time, it remains relatively small compared to its overall market cap. This suggests that the majority of the earnings before interest can be distributed to shareholders rather than debt holders. Additionally, the company’s growing free cash flows and dividends paid over time are a positive sign of its strong financial health.

Overall, Danaher Corporation’s impressive sales and earnings growth, manageable debt levels, and strong cash flows make it a compelling investment opportunity for those looking to invest in a solid, growth-oriented company.

Final Step: Valuation

As a final step, we examine Danaher’s valuation to determine whether the current stock price is reasonable. To accomplish this, we analyze two key metrics: the company’s historical price-to-earnings ratio and its 200-day and 50-day moving averages.

Upon reviewing the data, it seems that Danaher’s stock price is relatively lower than it has been in the past. This is indicated by the fact that the stock is currently trading below its 200-day moving average and its price-to-earnings ratio has decreased over time. These factors suggest that the stock may be undervalued, potentially making it an attractive investment opportunity for investors.

It is important to keep in mind that this article is not intended as specific investment advice, but rather serves to educate investors about potential investment strategies and tools. As always, it is essential to conduct thorough research and analysis before making any investment decisions, and to consult with a professional financial advisor or broker if necessary.