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Buy cheap quality stocks: how it works

The secret of success for successful shareholders:

Buy quality stocks and leave them there.

Too simple? Then a number more complicated:

Buy cheap quality stocks and leave them there.

By buying cheap stocks, you can increase your expected return. However, such efforts are not always successful. Because some shareholders have problems with the combination of words “cheap quality stock”. Suddenly you see only one stock with a glowing price tag on it. I spare us from lecturing about the anchor effect and instead offer a solution to the problem with the help of the stock finder, which:

  • Makes the quality of a share visible
  • Determines whether the stock is cheap or expensive

Make the quality of a share visible

When you ask shareholders what criteria they use to identify a quality stock, you usually get a shrug. Unless you asked one of the over 30,000 members in the stock finder. Because there, attention is paid to the stability of profit and cash flow, which is made visible with the help of specially calculated key figures and charts. A brief illustrative example. The following two graphics show the long-term earnings development per share. Which of the two shares is a quality share?

The long-term development of profit and dividend Share one with a profit stability of +0.98 of maximum 1.0:

The long-term development of profit and dividend Share two with a profit stability of +0.21 of maximum 1.0:

The long-term development of earnings and dividends for share two with a profit stability of +0.21 of a maximum of 1.0

The long-term development of earnings and dividends for share two with a profit stability of +0.21 of a maximum of 1.0

It’s so simple that you probably don’t need a solution.

Buy cheap quality stocks

For me, this discipline is the icing on the cake. Because whether you buy a quality share cheaply or expensive does not decide in the long term whether you are successful on the stock market in the long term. The only thing that matters is that you buy the right shares and then leave them there for as long as possible. Because the share of a company whose profits increase in the long term will also increase in price in the long term and distribute more dividends. And yet the purchase price also determines your return.

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