A framework to see your investing opportunities

[i4value]

I have a simple framework to classify each stocks. After I have done a fundamental analysis and valuation, I see which cell it falls into based on the matrix shown below. The cells are formed by the combination of margin of safety on the horizontal axis and business fundamentals on the vertical axis.



Conceptually

• Cell A – best investment opportunity
  
•  Cell B – this could be Warren Buffet “wonderful company at fair price”
  
• Cell C – Ben Graham “cigar-butt” investment
  
• Cell D – avoid
  

In this context, I would say that Scomi Energy, a Bursa oil & gas company, falls into cell D. If you want to see a cell A company, have a look at Petron Malaysia.