QVI's High-Quality Business Model Universe | Winter 2024
Using our proprietary research checklist parameters, I screened for high-quality businesses. Less than 1% of the investing universe made the cut.
Summary:
Quality Value Investing (QVI) has identified 85 enduring enterprises with high-quality business models through its current wealth screening parameters.
The screened companies span our circle of competence sectors: Communications Services, Consumer Discretionary, Consumer Staples, Financials, Health Care, Industrials, and Information Technology.
QVI will further explore the present value of selected stocks from the quality company screen in future posts.
After running a screen to discover a potential stock pick for Quality Value Investing’s (QVI) next new idea, I decided to focus this post on sharing the current wealth of enduring enterprises that emerged based on QVI’s checklist for quality business models.
In future posts, I will explore the present value or attractive stock prices of selected quality enterprises from the list below.
QVI Current Wealth Quality Screener
Using the QVI research checklist for the companies’ current wealth parameters, I screened for high-quality business models.
The beginning universe of publicly traded companies was 8,715.
Company Profile
Sectors: Communications Services, Consumer Discretionary, Consumer Staples, Financials, Health Care, Industrials, and Information Technology
Exchanges: NASDAQ and New York Stock Exchange [NYSE] (no over-the-counter or OTC issues)
Market Capitalization: Large Cap, Mid Cap, or Small Cap (no microcaps)
No companies were screened from the Energy, Materials, Real Estate, and Utilities sectors, as these are outside QVI’s circle of competence. No Chinese companies are included in selected sectors because of high geopolitical downside risks.
Company profile screen net results: 1,408 companies.
Value Proposition
Morningstar Economic Moat: Wide or Narrow
Value Proposition Elevator Pitch: Are the company’s products or services understandable?
Value proposition screen net results: 506 companies.
Returns on Management
Revenue Growth [3-Year Trailing]: Must be positive
Net Profit Margin [MRFY]: Must be profitable
Return on Equity [TTM]: 15% and higher
Return on Invested Capital [TTM]: 12% and higher
Free Cash Flow Per Share [TTM]: Must be positive
Returns on management net screen results: 134 companies.
Enterprise Downside Risks
Long-Term Debt Coverage [MRQ]: Higher than 1.00
Debt to Equity [MRQ]: Less than 1.00
Current Ratio [MRQ]: Higher than 1.00 except for consumer staples and health care sectors
Enterprise downside risk net screen results: 85 companies.
Basket of 85 High-Quality Business Models
The 85 businesses that survived the current wealth screening parameters are listed by sector.
Company name | (Ticker symbol) | Industry served | Market capitalization
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