GuruFocus Screener World Travels: Introduction, Part 2

Continuation of introduction to video series seeking margin growth companies globally

Nov 02, 2020

As we continue living in unprecedented times, GuruFocus is pleased to present the second of two introductory videos for an upcoming virtual tour that explores for margin-growing companies across over 20 stock markets worldwide.

First introductory video recap

In the first video, we discussed how to create a "Margin Growth Screen" using GuruFocus' All-in-One Screener, a Premium feature of the website. The screen builds on Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) co-managers Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio)'s strategy of purchasing shares of good companies at fair prices. Key criteria include a business predictability rank of at least three stars, positive operating margin and five-year margin growth rates, positive five-year revenue and earnings growth rates and modest undervaluation based on the GF Value, a website-exclusive method to value stocks.

Video highlights

The second introductory video utilizes the Screener's new Customized Rank feature, which allows a user to rank the Screener results based on a user-defined combination of multiple fields. For example, Gotham Asset Management leader Joel Greenblatt (Trades, Portfolio) developed a magic formula that considers the combination of earnings yield and return on capital.

Since Buffett underscored the importance of positive and growing operating margins, the "Margin Growth Rank" will give 300% weight to operating margin growth, 200% weight to operating margin and 100% weight to both revenue growth and earnings growth.

Looking ahead

Our next video will cover the first country in our itinerary, Canada. According to the global market valuation pages, the stock market of Canada is fairly valued based on its total market cap to gross domestic product ratio of 116.34%, compared with a 20-year range between 81.28% and 170.72%. The contribution to expected annual return is 0.52% assuming a reversion to the 20-year average of 121.3%. Including dividends and business growth, the total expected annual return is approximately 5.8%.

Disclosure: No positions.

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