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Time of India
5 days ago
- Business
- Time of India
Warren Buffett shares one ‘simple' tip for evaluating a company before investing and how to avoid costly mistakes
Warren Buffett, the billionaire investor behind the success of Berkshire Hathaway, is widely admired not just for his wealth, but for his simple, time-tested investment philosophy. One of his most powerful ideas is the 'circle of competence' — the concept that you don't need to understand everything about every business to be a great investor. Instead, staying within your intellectual comfort zone is the key to making rational, long-term decisions. As Buffett once wrote, understanding your limits is more important than having a vast amount of knowledge. This principle still offers a practical framework for anyone looking to invest wisely in today's fast-paced market. What is Warren Buffett's 'viral tip' before investing Warren Buffett introduced the idea of a 'circle of competence' in his 1996 letter to Berkshire Hathaway shareholders. He explained: 'You don't have to be an expert on every company… You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.' Simply put, a circle of competence is the area where your knowledge and expertise allow you to make sound decisions. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Is this legal? Access all TV channels without a subscription! Techno Mag Learn More Undo Rather than spreading your investments thin across unfamiliar sectors, Buffett advises focusing on industries and companies you truly understand. How Warren Buffett's investing style helps avoid costly mistakes Buffett's approach is built on avoiding avoidable mistakes, rather than chasing maximum returns. The more familiar you are with a business model — how it earns money, its market demand, its competition — the less likely you are to be misled by market noise or hype. According to Pamela Sams, a financial advisor at Jackson Sams Wealth Strategies: 'Buffett's style keeps you focused on what the business does and why it matters. That's how you avoid mistakes and busted portfolios.' This method protects investors from emotionally driven decisions and emphasizes clarity over complexity. Real-world examples from Warren Buffett's portfolio Coca-Cola (KO) Buffett invested in Coca-Cola when others doubted the move. His rationale wasn't based on stock price speculation — he recognised the brand's global reach, strong pricing power, and customer loyalty. These traits made it a stable, long-term investment well within his circle of competence. See's Candies Buffett has held onto See's Candies for decades because of its reliable earnings, brand loyalty, and scalable business model. He understood the company deeply and valued its consistent performance over time. Avoiding the Dot-Com Bubble During the internet boom of the late 1990s, Buffett avoided tech stocks because they didn't fit his knowledge base. That decision, ridiculed by some at the time, saved him and Berkshire Hathaway from the losses that followed the dot-com crash. How to apply Warren Buffett's circle of competence rule in your own investing Know what you know and what you don't Begin by identifying industries, products, or services you understand. This might stem from your profession, hobbies, or personal use. For example: If you work in healthcare, you may understand pharmaceutical companies. If you're a tech enthusiast, certain consumer electronics brands might fall within your circle. Evaluate companies Like Buffett would When analysing a company: Ensure the business is easy to understand. Look for a durable competitive advantage (brand, scale, switching costs, etc.). Prioritise stable, predictable earnings over speculative growth. Consider management quality and their track record in capital allocation. Buffett initially avoided tech companies, viewing them as unpredictable. But over time, he saw that Apple's brand loyalty, ecosystem lock-in, and customer retention made it resemble a consumer staple, not just a tech firm. This shift illustrates that your circle of competence can expand — but only through genuine understanding, not overconfidence. Common mistakes to avoid when applying this rule Chasing trends outside your circle Jumping into cryptocurrency, AI startups, or biotech firms just because they're trending can be risky — especially if you don't understand how those businesses make money or how to assess their sustainability. Confusing familiarity with competence Using a product doesn't always mean you understand the company behind it. For example, loving a new gadget doesn't automatically mean the stock is a good investment. Competence involves analyzing financials, industry dynamics, and leadership. Warren Buffett's tips for safely learning new industries Buffett's advice isn't about staying stagnant. You can expand your circle by: Reading company annual reports and investor presentations. Following trusted financial experts and analysts. Taking time to understand how new industries function. But the expansion should be slow and deliberate. As Buffett often says: 'Risk comes from not knowing what you're doing.' Overconfidence in a new sector can lead to costly mistakes. For everyday investors, the takeaway is simple but profound: You don't need to know everything. You just need to know what you know — and invest accordingly. Also Read | Foxconn sells Lordstown plant for $88 million but keeps EV production running while expanding US growth plans Stay informed with the latest business news, updates on bank holidays and public holidays .
Yahoo
06-06-2025
- Business
- Yahoo
2 Growth Stocks to Add to Your Roster and 1 to Brush Off
Growth is oxygen. But when it evaporates, the consequences can be extreme - ask anyone who bought Cisco in the Dot-Com Bubble (Nvidia?) or newer investors who lived through the 2020 to 2022 COVID cycle. The risks that can come from buying these assets is precisely why we started StockStory - to isolate the long-term winners from the losers so you can invest with confidence. On that note, here are two growth stocks where the best is yet to come and one climbing an uphill battle. One-Year Revenue Growth: +15.7% Founded in 1915, Fox (NASDAQ:FOXA) is a diversified media company, operating prominent cable news, television broadcasting, and digital media platforms. Why Should You Dump FOXA? Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 3.9% over the last two years was below our standards for the consumer discretionary sector Forecasted revenue decline of 4.3% for the upcoming 12 months implies demand will fall off a cliff FOX's stock price of $53.50 implies a valuation ratio of 13.6x forward P/E. If you're considering FOXA for your portfolio, see our FREE research report to learn more. One-Year Revenue Growth: +27.4% Originally a metal-working shop supporting local petrochemical facilities, Powell (NYSE:POWL) has grown from a small Houston manufacturer to a global provider of electrical systems. Why Could POWL Be a Winner? Impressive 34.8% annual revenue growth over the last two years indicates it's winning market share this cycle Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 209% annually At $181 per share, Powell trades at 12.3x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it's free. One-Year Revenue Growth: +32.3% With operations spanning 64 countries and a portfolio of over 10 new products launched in 2023 alone, Globus Medical (NYSE:GMED) develops and sells implantable devices, surgical instruments, and technology solutions for spine, orthopedic, and neurosurgical procedures. Why Do We Like GMED? Average constant currency growth of 61.4% over the past two years demonstrates its ability to grow internationally despite currency fluctuations Revenue outlook for the upcoming 12 months is outstanding and shows it's on track to gain market share Earnings growth has trumped its peers over the last five years as its EPS has compounded at 13.8% annually Globus Medical is trading at $59.20 per share, or 16.8x forward P/E. Is now a good time to buy? Find out in our full research report, it's free. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.
Yahoo
05-06-2025
- Business
- Yahoo
If You Invested $1,000 in Target 1 Year Ago, You'd Have $642 Now
Target is a massive retailer with a huge following — at least until recently. Target has seen some ups and downs lately due to their Diversity, Equity, and Inclusion (DEI) changes. This has led to a massive public backlash and Target stock prices have been falling as well. Investors have held out hope that the once-popular retailer can become more profitable, but this has not been the case. In fact, Target stock has been falling for years before their recent negative publicity. If you've been a short-term or long-term Target investor, you probably feel a bit disappointed right now. Let's break down Target's stock price history and how much your investment would be worth if you bought Target stock (TGT) 1, 5 or 10 years ago. Target has been a publicly-traded company since 1969. The price of Target stock didn't fare well during the early years, but began to grow through the early 1980s (until Black Monday). Target stock really took off during the Dot-Com Bubble in the late 90s, but because it had a solid brick-and-mortar presence when the market crashed in 2000 to 2001, it fared a bit better than purely online companies. Steady growth through the 2000s was massively interrupted by the Great Recession in 2008. While Target stayed afloat, the stock price traded sideways for over a decade after that. Fast-forward to 2020 and when the pandemic (and lockdowns) set in, Target became one of the only essential retail stores still open. Investors flocked to the stock as it became apparent that toilet paper and hand sanitizer were worth their weight in gold — and Target stocked both. The price quickly shot up, going from around $91 per share, to over $260 per share in a matter of months. Things began to unravel quickly for TGT investors, as lockdowns were eased and the world opened up. Target stock dropped like a rock and even with a few positive months mixed in — has continued a steady decline into 2025. Today, Target stock is only worth around $94 — a fraction of the $260 per share it was trading for just a few years ago, according to Per Target's corporate website, here's the historical price of Target stock today, a year ago, 5 years ago and 10 years ago: Today: $94.87 1 year ago: $147.74 5 years ago: $122.33 10 years ago: $79.32 If you invested $1,000 in Target stock on May 29, 2024 (a year ago) you would have been able to purchase it at a price of about $147.74 per share. That means you would own about 6.77 shares of Target stock. Today, Target stock is trading at around $94.87 per share. Your 6.77 shares of Target stock would now be worth $642.27 — a $357 loss in just one year. But what if you chose to buy and hold Target stock 5 years ago or even 10 years ago? If you invested $1,000 in Target stock five years ago, you would have been able to purchase it at a price of about $122.33 per share. That means you would own about 8.17 shares of Target stock. Today, your 8.17 shares of Target stock would now be worth $775,09 — a $225 loss. But what about 10 years ago? Target shares were trading for around $79.32 10 years ago — meaning your $1,000 would have bought you 12.61 shares of stock. Today, your 12.61 shares of Target stock would now be worth $1,196.31 — a small $196 gain. Considering the S&P 500 has more than doubled in price over the last 10 years, you would definitely have underperformed the market over the last decade. Target stock is still suffering from losses — and continuing to lose investor confidence. With the DEI changes, plus Trump's tariffs — investors may continue to shy away from Target stock. But it's been around for over 55 years and who knows what the future holds for Target. If you're a believer in the retail chain and think it can turn around the bad press and business moves of the last decade — there may be hope. But as always, when investing in individual stocks, proceed with caution. They are far more volatile than more diversified investments (like index funds). More From GOBankingRates Surprising Items People Are Stocking Up On Before Tariff Pains Hit: Is It Smart? 7 Things You'll Be Happy You Downsized in Retirement This article originally appeared on If You Invested $1,000 in Target 1 Year Ago, You'd Have $642 Now Sign in to access your portfolio
Yahoo
23-05-2025
- Business
- Yahoo
2 Growth Stocks to Own for Decades and 1 to Steer Clear Of
Growth is oxygen. But when it evaporates, the consequences can be extreme - ask anyone who bought Cisco in the Dot-Com Bubble (Nvidia?) or newer investors who lived through the 2020 to 2022 COVID cycle. Luckily for you, our job at StockStory is to help you avoid short-term fads by pointing you toward high-quality businesses that can generate sustainable long-term growth. Keeping that in mind, here are two growth stocks where the best is yet to come and one whose momentum may slow. One-Year Revenue Growth: +15.3% With customers across the foundry and fabless markets, FormFactor (NASDAQ:FORM) is a US-based provider of test and measurement technologies for semiconductors. Why Are We Out on FORM? Muted 4.4% annual revenue growth over the last five years shows its demand lagged behind its semiconductor peers Projected sales growth of 2.4% for the next 12 months suggests sluggish demand Efficiency has decreased over the last five years as its operating margin fell by 6.1 percentage points At $32.31 per share, FormFactor trades at 20.8x forward P/E. Read our free research report to see why you should think twice about including FORM in your portfolio, it's free. One-Year Revenue Growth: +20.4% Formerly part of Emerson Electric, Vertiv (NYSE:VRT) manufactures and services infrastructure technology products for data centers and communication networks. Why Is VRT a Top Pick? Core business is healthy and doesn't need acquisitions to boost sales as its organic revenue growth averaged 18.5% over the past two years Free cash flow margin jumped by 6.5 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends Rising returns on capital show management is finding more attractive investment opportunities Vertiv is trading at $104.26 per share, or 27.9x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it's free. One-Year Revenue Growth: +36.4% Founded in 1876 by a Civil War veteran and pharmacist who was frustrated with the poor quality of medicines available at the time, Eli Lilly (NYSE:LLY) discovers, develops, and manufactures pharmaceutical products for conditions including diabetes, obesity, cancer, immunological disorders, and neurological diseases. Why Are We Bullish on LLY? Market share has increased this cycle as its 33% annual revenue growth over the last two years was exceptional Share repurchases have amplified shareholder returns as its annual earnings per share growth of 17.6% exceeded its revenue gains over the last five years Industry-leading 25.8% return on capital demonstrates management's skill in finding high-return investments Eli Lilly's stock price of $716.51 implies a valuation ratio of 28.1x forward P/E. Is now the right time to buy? Find out in our full research report, it's free. Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
16-05-2025
- Business
- Yahoo
1 Growth Stock to Add to Your Roster and 2 to Approach with Caution
Growth is oxygen. But when it evaporates, the consequences can be extreme - ask anyone who bought Cisco in the Dot-Com Bubble (Nvidia?) or newer investors who lived through the 2020 to 2022 COVID cycle. Luckily for you, our job at StockStory is to help you avoid short-term fads by pointing you toward high-quality businesses that can generate sustainable long-term growth. That said, here is one growth stock with significant upside potential and two that could be down big. One-Year Revenue Growth: +139% Doubling as a hospitality services provider for hotels and resorts, The One Group Hospitality (NASDAQ:STKS) is an upscale restaurant company that operates STK Steakhouse and Kona Grill. Why Is STKS Risky? Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants Earnings per share have dipped by 17.6% annually over the past five years, which is concerning because stock prices follow EPS over the long term 7× net-debt-to-EBITDA ratio shows it's overleveraged and increases the probability of shareholder dilution if things turn unexpectedly The ONE Group is trading at $4.35 per share, or 1.3x forward EV-to-EBITDA. To fully understand why you should be careful with STKS, check out our full research report (it's free). One-Year Revenue Growth: +16.3% With over 6,600 licensed mental health professionals treating more than 880,000 patients annually, LifeStance Health (NASDAQ:LFST) provides outpatient mental health services through a network of clinicians offering psychiatric evaluations, psychological testing, and therapy across 33 states. Why Are We Hesitant About LFST? Subscale operations are evident in its revenue base of $1.28 billion, meaning it has fewer distribution channels than its larger rivals Cash-burning history makes us doubt the long-term viability of its business model Negative returns on capital show that some of its growth strategies have backfired At $5.79 per share, LifeStance Health Group trades at 76.2x forward P/E. Dive into our free research report to see why there are better opportunities than LFST. One-Year Revenue Growth: +17.8% Created with the idea of virtually replacing paper catalogues, Pinterest (NYSE: PINS) is an online image and social discovery platform. Why Are We Fans of PINS? Monthly Active Users have grown by 10.4% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features Healthy EBITDA margin of 27% shows it's a well-run company with efficient processes PINS is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders Pinterest's stock price of $32.35 implies a valuation ratio of 17.8x forward EV/EBITDA. Is now the right time to buy? See for yourself in our full research report, it's free. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
