My investing style: Buy and hold high-quality businesses
Here are 15 traits that tell me I've found a great business ⬇️
1/ Recurring Revenue
Types:
Business Services $MCO
Contracts $AMT
Consumables $MNST
Exchange $MKTX
Franchise $WINA
Membership $TDOC
Platform $ETSY
Razor/blade $DXCM
Real Estate $STOR
SaaS, PaaS, IaaS $TWLO, $NOW, $FSLY
Subscription $NFLX
Tollbooth $BIP
2/ Recession-Proof Demand
Great companies sell products/services that are in-demand in good times and bad
That allows them to grow regardless of what is happening in the broader economy
3/ Organic Growth
"Organic" growth: Growing by increasing sales of internally developed products/services
"Inorganic" growth: Growing from mergers & acquisitions
Organic Growth > Inorganic Growth
4/ High & Expanding Gross Margin
Indicates that the company’s products/services create a huge amount of value for the customer
Rising gross margin also indicates pricing power