Any stock I believe in has to be going places and meet three key criteria, the three ‘G’s below
- G1 Great story. All the most exciting businesses have a great story, sometimes more than one. Amazon has three incredible complementary businesses – Amazon retail (selling stuff online), Amazon Prime (its subscription service which gives you free delivery and video streaming) and Amazon Web Services, its cloud computing business. Even one of these stories would have made it one of the world’s great growth stocks, having three of them means that in just 20 years founder, Jeff Bezos has become the world’s third richest man.
- G2 Great growth. The proof is always in the pudding. A great story is just a dream unless we can see it in the numbers. Something important to the business should be growing, either customers, sales, profits, earnings, dividends or maybe all of these things. If I can’t see and touch that growth I don’t touch the stock.
- G3 Great chart. This is a bit more technical. I use charts and fundamentals, when I pick stocks. It is something I have always done and it works for me. At its simplest a great chart means the shares are heading higher. I never want to be the only guy buying. If this company is so great other people should be buying the shares. If nobody else is I become very suspicious and again I won’t touch it.