Our goal as equity investors is to outperform the market in any economic environment. In reality, we need to understand that stock portfolios will never be 100% perfect. However, we can put ourselves in the best position to achieve our personal investing goals when we pick Warrior Stocks.
What is a Warrior Stock?
Warrior Stocks are…
…Proven companies that have persisted through different economic conditions and uncertainty.
…Unjustifiably beaten down stocks that will likely claw back to fair market value through solid fundamentals.
…Committed management teams that fight for a company’s development, customers, and shareholders.
A Warrior Stock is a value stock with a formidable growth story.
Guiding Principles
The following are the principles I follow to identify Warrior Stocks.
1. The Three Lows
When we consider “The Three Lows”, it gives us a better chance to find companies that are more likely to increase in value, survive a downturn, and endure more competition.
Market Cap
Micro to Small market cap companies with consistently growing metrics such as Revenue, EBITDA, and/or Free Cash Flow have the longest runway for expansion.
Liquidity/Volume
Less traded companies typically have less volatility and are held by similar investors who are holding for the long term.
Multiples
Comparatively or historically depressed multiples present an opportunity to buy stocks cheap and decrease the likelihood of tail-end outcomes.
2. Event Driven Undervaluation
Events provide a catalyst for Warrior Stocks to grow or bounce back.
Basket Sell-offs (Counter Quant Strategy)
Large sell-offs occur for a multitude of reasons such as macro concerns, unfavorable company news, and institutional pessimism. There’s a trend in trading where funds sell baskets of stocks that are grouped by factors such as industry or sub sector. There are times when certain companies should not be swept up in the sale. Basket sell-off events provide interesting buy low opportunities for Warrior Stocks.
Bounce Back Catalyst
Changes in projected earnings or capital allocation serve as triggers for Warrior Stocks to bounce back after a market or basket sell-off. These projections and changes give us a growth story to follow within the company.
3. Unappreciated Industries
Industry analysis provides a holistic picture for how the puzzle pieces all fit together.
Macro Trends and Third Degree Beneficiaries
When we look at macro trends, we think about the industries that will be a third degree beneficiary of economic cycles to look for undervalued Warrior Stocks. Uncovered industries that become more mainstream provide additional growth opportunities.
Positioning and Business Model Differentiation
Established companies in unappreciated growing industries will benefit from existing relationships, experience, and branding as more companies attempt to enter the market. These companies are more likely to fend off the attracted competition. If an industry is highly fragmented, business model differentiation is a priority. A Warrior Stock needs some sort of edge to have a chance to fight depressed valuation.
Achaion.com
Ultimately, there is no guarantee when it comes to investing.
However, we can control how well we position ourselves mentally.
When we conduct thorough research, turn over every stone, and construct detailed pictures of a company, we develop the conviction to hold our picks for long durations, buy more when cheap, and live with the risks we undertake.
I will do my best to provide stock picks, research, and education on Achaion.com that will possess the conviction, thoroughness, and enthusiasm necessary to help you learn about new companies, develop as an investor, and foster a love for learning.
You can expect free bi-monthly Warrior Stock picks, supplemental research, and basic investing tutorials.
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Employ your curiosity.
– Maximus Beach
Learn more about Maximus Beach’s background here.
The opinions and statements contained in the writing in this post do not constitute an offer, a solicitation, or a recommendation to enact or decrease an investment or to make any other transaction. It should not be the cause for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs. This content has been produced by Achaion.com and has not had any outside input. Read more about Achiaon.com’s Disclosures and Privacy Policy.
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