How to Pick Quality Shares: A three-step process for selecting profitable stocks

by Phil Oakley

How to Pick Quality Shares provides a three-step process for analysing company financial information to find good finding quality companies; avoiding dangerous or risky companies; and not paying too much for companies’ shares. Applying the in-depth techniques described here will give investors a fuller understanding of how companies really work, and an edge over other investors, including professional investors and analysts. Phil Oakley, an experienced investment analyst and private investor, guides the reader step-by-step through these three 1. For the first step, he shows how to identify the kind of high-quality companies that are likely to be profitable investments over the long term. Important themes are how much a company earns on the money it invests, reliable measures of profit, and the importance of cash flow. 2. Next, he shows how to spot dangers and risks that can lead to a company that is superficially attractive turning out to be a bad investment. Here the focus is on how to analyse debt, in particular hidden debt and pension fund deficits. 3. Lastly, he shows how to value a company’s shares and determine what is a reasonable price to pay to invest in that company. Phil shows why some common shortcuts to valuing shares are unhelpful, and how to use cash profits to value shares more reliably. No longer is in-depth financial data and analysis the preserve of the City. Private investors have access to all the information they need to make well-informed investment decisions. But still many investors lack the confidence to back their own judgment. How to Pick Quality Shares will give you this confidence - improving your skills and making you a more profitable investor.

Genres: Finance, Nonfiction

223 pages, Kindle Edition

Published May 22, 2017

Reviews

[Alun Rhys · Rating 5 out of 5]

No nonsense with lots of applied theory. Best buy in years .

It's refreshing to read a book that focuses on UK companies and the author gives the reader a solid checklist for being a pragmatic individual investor. As an Actuary and avid investor who uses the Greenwald approach to valuation, I was pleased to hear the author recommending the modern EPV approach. The author speaks plainly and out of experience and advocates a cash view over an accruals view of the world, which in my humble opinion, is very sound advice. To the author: Keep on writing.

[Joma Silva · Rating 5 out of 5]

This book offers a highly practical guide to selecting quality shares. it stands out with its use of real-world examples from the UK stock market. This focus is a refreshing departure from the usual US-centric examples and provides valuable, less commonly found insights for those interested in UK equities.
While the content is generally strong and actionable, it's worth noting that the section on lease accounting treatment isn't fully up-to-date with the latest standards. However, the underlying principles discussed remain important for fundamental analysis.
Overall, it's a recommended read for investors seeking a hands-on approach, particularly those with an interest in the UK market, despite the minor point on lease treatment updates.

[Ronny Blankenberg · Rating 5 out of 5]

The quality of this book was a very nice surprise. It prerequisites some knowledge of accounting and the framework for why one should invest in quality companies (although this book touches on it briefly, other books cover it in more detail—and better—than Oakley). However, this book provides an actionable approach to finding quality companies and thinking about how to value them, suggesting a three-step system. It does so in a practical and easy-to-understand manner, while making use of real-life examples for pedagogical purposes.

If you are interested in investing in quality companies for the long haul, I think it is highly likely that this book will add value to your approach or checklist. I highly recommend it and will borrow from it heavily to update my own checklist.

[Alessandro Orlandi · Rating 4 out of 5]

It was quite good, even though in my opinion it wasn't well explain the role of the different ratios proposed. I learnt a bunch of new things to pay attention to when I buy shares. So it was worth the time.

[Juanma · Rating 4 out of 5]

No para principiantes. Interesante acercamiento a las empresas de calidad, cómo reconocerlas, cómo evitar las que no lo son y cómo valorarlas. Algunos puntos son más interesantes que otros, pero siempre es posible aprender cosas.

[Nilesh P S · Rating 5 out of 5]

A good summary of quantitative analysis that's worth reading again.

[Ferhat Culfaz · Rating 5 out of 5]

Excellent book. Really detailed analysis of balance sheet and Cashflow statement. Tricks and tips on manipulation spotting. Great few chapters on valuation methods. Nicely written.

[Tyme Regent-Bascombe · Rating 5 out of 5]

One to refer to over and over again. Easy to understand with lots of good takeaways.

[Rakesh · Rating 5 out of 5]

the valuation part was too good