How long does DD take you?
On average? Lets say you already understand how the industry operates, how long?
For me, I always have the problem that I feel I didn't spend enough time. But usually after like 2 hours I feel that I understand if it is a buy or not. The little details do nothing but confuse my original thought, because no company is going to be perfect.
For instance, if 1) I like the industry and how it relates to the macro environment 2) Earnings never miss estimates 3)EPS Growth rate is good 4) ROE/ROA is improving 5) The company has confident management and buys back shares 6) Is very well covered, so that there are plenty of news articles so I dont ever have to worry about missing a vital piece of info 7) The company is the best in its field 8) The chart is not ugly 9) The balance sheet is clean enough 10) They have enough cash to meet their bills
Is there really a need to still do like another 5 hours of research?
For instance, I just picked up shares of MHS on the drop, and did this quick analysis
1) Good industry
2) Was fine during the recession
3) Market leader
4) Insane growth (25% projected 5 years)
5) Never misses earnings
6) Buying back shares like crazy
7) Patent cliff is a huge catalyst
8) Baby boomers getting older
9) Increased healthcare spending
10) High retention rate of contracts
11) Stock is cheap in terms of PEG
12) No dividends + lots of debt = leveraging their returns (and since they were fine during recession im not worried about hard times hampering this)
13) Increasing ROA and ROE a lot every year
14) Confident management
15) The recent sell-off only impacts their earnings by 3-7 cents per share...no big deal
In all honestly, is there a big need for a lot more DD? I read the last earnings call transcript, and will continue to read every Income statement and earnings call they have...tell me what else I should be doing, I am not such a fundamental guy, more of a momentum guy
My main problem with MHS is an ugly chart...but I have no problem buying more on dips