The principles of the Berkshire Hathaway which Warren Buffet is a part of is his ultimate guide for when choosing a winning stock. A proper application of these principles that work for Buffet has also worked for a number of investors. These people, even in Nigeria today mostly invest in stocks they understand per the Warren Buffet principles.
More of the principles say that choosing companies that have reasonable long-term prospects and have sustainable competitive advantages increase the chances of investors’ success. Reasonable prices are also a big factor for Buffet.
What is a possible Warren Buffet stock listed on the Nigerian Stock Exchange, NSE, and what are the potentials of such stocks?
Are the Premium Brands on NSE List possible Warren Buffet stocks in Nigeria?
Are the premium brands on the Nigerian Stock Exchange list possible Warren Buffet stocks in Nigeria. Following his principle, do premium stocks have the potentials that Warren Buffet looks at?
Premium stocks in Nigeria are at the advantage of Warren Buffet and there less than 10 of them listed on the NSE.
A number of premium advantages give great returns on capital investment but also keeps a company from losing customers. Premium stocks like MTN have flourished the last months as they achieved a 14,3% return on equity (ROE) in 2019. One potential positive for premium brands like MTN Nigerian Communication during the pandemic is people using more and working over the internet from home.
Premium stocks that are appealing to households have the potential to outperform in years to come. More so, they have strong growth prospects which makes them even better candidates. This is how we summed up the key components that a possible Warren Buffet stock in Nigeria would have.
- Longer years of good ROE
- A lesser ratio of debt to equity and strong shareholders’ equity
- A company that is proficient at growing their profit margins year-over-year
- Shares discount that can yield more profitability
- Good profit margins
- Uniqueness of products
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