Comprehensive Research And Due Diligence: Here's How I Do It!

  • My due diligence process starts by taking a quick review and assessment of a company’s fundamental qualities and valuation.
  • Snap On, Inc. is worthy of a more comprehensive research effort.
  • F.A.S.T. Graphs analyze out loud video going through my research process.

Introduction

I have been writing a series of articles on attractively valued research candidates available in the various sectors as depicted by FactSet Research Systems, Inc. In every article in this series, I try to be clear by pointing out that these are only research candidates and not recommendations to buy. Stated more directly, these are stocks that I feel are reasonable candidates to examine more deeply.

However, I was motivated to write this sidebar article because a subscriber to my YouTube channel asked me if I could do a video and explain how I go about conducting the comprehensive research and due diligence that I always suggest. So, I thought I would go through and share the process that I would utilize to conduct my own comprehensive due diligence and research on any stock that I might eventually be interested in buying.

First, I determine if a stock is research-worthy. If it is, then (and only then) will I conduct a comprehensive research and due diligence effort prior to investing. My point is that it doesn’t make any sense to waste my time researching a stock when it’s obvious that I cannot, or will not, buy it. Of course, for me the primary determinant as to whether a stock is research worthy or not is valuation. No matter how much I admire a company, I will not overpay for even the best-of-breed business. As Warren Buffett so aptly put it, “Price is what you pay, value is what you get.”

On the other hand, if I come across a stock that I truly admire and simultaneously see it at what appears to be an attractive valuation, I am excited to dig deeper. Moreover, the word "excited" is most appropriate, because to me nothing is more fun than learning about an attractively valued great business. But most importantly, I would never purchase a stock without conducting a comprehensive research and due diligence effort.

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Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit ...

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