Terry Smith: Quality at fair price
Terry Smith Portfolio Metrics To Find Quality Stocks
Finding Quality Stocks Using Terry Smith Portfolio Metrics
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Interest Converage>=10
The interest coverage is least 10
GM>=55%
A gross margin of at least 55%
OM>=20%
An operating margin of at least 20%
FCF growth 5Y>=0%
In the last 5 years the Free Cash Flow has grown
ROCE(5y)>=15%
A 5 year average ROCE of at least 15%
GICS: Industrials, Consumer Discretionary, Consumer Staples, Health Care, Information Technology, Communication Services, Utilities
Exclude low profitability industries
Cash Conversion>=90%
At least 90% of EBITDA is converted into cash flow
P/FCF<=30
An fcf yield of at least 3.33%
Debt/FCF<=5
The debt is less than 5 times the Free Cash Flow
Market Cap: At least Small (300M+)
Avoid very small caps
Long term chart
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