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What stocks should I invest in?
You'll be surprised with this answer
Welcome To The Long Wealth Newsletter (August 22nd). (est. 4 min read)
In today’s newsletter we will go over:
Focus on companies with strong, consistent cash flow and low debt
How to make consistent gains in this market
Some chart analysis
And much, much, more..
Actionable Tip Of The Day
Focus on companies with strong, consistent cash flow and low debt.
Here’s what to look for:
Company’s cash flow statements over the past few years
Check their debt to equity ratio
Compare these metrics to other companies in the same industry
Top Links Of The Week
Deep Dive
Why do we want to focus on companies with strong cash flow and low debt?
Financial stability:
Strong cash flows indicate a company can cover its operational costs and investments without relying on external financing.
This stability helps companies survive economic downturns when credit might be scarce or expensive.
It also provides a buffer against unexpected expenses or market shocks.
Growth opportunities:
Excess cash allows companies to invest in growth or make strategic acquisitions.
They can fund research and development, expand operations, or make strategic acquisitions.
This self-funded growth can be more sustainable and less risky than debt-fueled expansion.
Lower risk:
Less debt means lower risk of bankruptcy during tough times.
It also means less risk of bankruptcy or forced restructuring if revenues decline.
Lower debt levels often translate to more stable stock prices during market volatility.
Flexibility:
Strong cash flow gives companies more options in changing markets.
They can take advantage of opportunities that arise, such as acquiring distressed competitors.
This flexibility can be a significant competitive advantage in fast-changing industries.
Value preservation:
These stocks tend to be less volatile during market turbulence.
Investors often flock to these "quality" stocks during times of uncertainty, providing price support.
Potential for Higher Returns:
Over time, companies with strong financials often deliver superior returns with lower risk.
They're better positioned to compound their advantages over competitors.
If you enjoy these types of emails more, let me know in the polls.
Darold Trinh
Long Wealth Newsletter
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