In this screen we apply some basic filters to find stocks which qualify for quality investing. Quality investors only invest in the best and most profitable companies available. The screener can filter for criteria which are quantifiable, but besides this more research should be done on the results. Make sure to check the linked article for more information on quality investing and the screen.
An overview of our Caviar Cruise Quality screens.
In this video, we take a look at a recently added trading idea that was developed specifically to identify high-quality stocks.
The Profit Quality is defined as the Free Cash Flow to Net Income as a percentage and expresses to what extend the company is able to turn net profit (an accounting number) into real hard and valuable cash. We want at least 75% on average in the past 5 years.
We want the Debt to Free Cash Flow ratio to be below 5, meaning it would take less than 5 years to pay of the total debt if the company would use their free cash flow for this purpose
The EBIT growth should be above the revenue growth.
Looking at the US only here
A yearly revenue growth of at least 5% on average in the past 5 years
A return on Invested Capital (ROIC) of at least 15%