On the SXE thread a recent poster described SXE and SRG as 'elite' companies. I prefer to use the term 'exceptional'.
I have 4 firms (SXE & SRG plus 2 others) in my 'exceptional' list. All small-cap industrials... with another 2 incl. ANG on the reserve bench.
Like everyone, my strategy in investing/trading has evolved over the years. I read plenty reports and articles by mkt analysts/fund managers and am always learning.
I have moved away from speccie firms into established firms... but ALL are small-caps with only 2 just recently added to the ASX300. I have strived to become more disciplined and it is def paying off.
Yet one bad mistake I continue to make is to sell and take profits far too early in good strong companies with competitive advantage in their niche. I did this several times in CY 24.
Take SRG for example:
I bought post 1Hfy24 result in late Feb for just under 75c av. Then foolishly sold the lot for 90c in late May of the same year! Yes i did also collect a small 2c ffr div. 9 months later the SP hit $1.50!
For what it's worth here is my Investment Approach which is adjusted quite regularly.
Value driven approach: The firms must be significantly undervalued, profitable and meet my list (see below) of investment criteria. The main factors I look at when considering an investment are:
Companies with a well-established business with sufficient mkt liquidity
Companies with a large addressable market and favourable macro environment
Companies generally should be at least 2 years or longer EBITDA profitable
Companies with EBITDA growing by at least 20%/annum
ROE of at least 14%
Companies with low manageable debt or no debt are preferred
High cash flow generating businesses
Companies with high earnings visibility and disclosure
Companies with a predictable future earnings stream
Companies in a growing sector
Companies with a competitive advantage or brand name
Companies with a stable management and track record for delivering growing value to shareholders
At mkt open today I doubled my stake in SRG paying $1.155. I bought 1st half at $1.23 cum div so average buy-price is $1.1925. SRG ticks all the boxes on my list AND at current SP of around $1.185 is excellent value. This time I intend to hold until at the very least the final div in Sept has been received. Hopefully a lot longer than that but the world is so damn fragile, almost anything is possible.
(20min delay)