Hey guys, it's sasha and in this video i'll tell you the five signs that i look for that show me a company, maybe a good, a killer investment opportunity and no, these five signs aren't the obvious stuff or a pointless regurgitation of what you've already heard. A hundred times already, it's not going to be the five numbers in the p l to look for or some magic ratios. These signs are a lot more subtle than that. These are the five signs that i personally look for in a company.

When i make my investment decisions that tell me that this company has a particularly good chance of beating the market in the long haul, if a company shows more than one of these five signs, i pay a lot of attention and i will study that company very Carefully, if the company shows three of these signs, i will usually be putting a lot of money in now. Remember that these five signs are not the be-all and end-all to making investing decisions or to an investment strategy. There is a whole lot to consider when you're buying into a stock or selling out and a proper evaluation of a stock for investing should take time. If somebody on youtube tells you that you can decide whether to invest in the company in two minutes.

By only ever looking at eight specific numbers, then you can safely discard every bit of advice that that person has given you, because they clearly don't understand anything about investing fundamentals or valuing stocks. All right, let's get started. The first sign that i get very excited by is when a company actively reinvests all of its profits into active growth. And yes, i set the weight active twice there, and that is on purpose.

That is the secret to the sign. If a company knows that they are onto a winning product or a winning service or a winning strategy, then often that company will do everything in their power. The good ones will, anyway, to scale their business to sell more of that product sell more of that service. Deliver more of that strategy now this doesn't apply to every type of company or every industry, but in some cases the limiting factor for these types of companies is a reach and if a company really has the service of product that is delivering insane results and crazy Profits, then putting everything you've got into expanding reach is a major sign of strength.

If you had something that you could sell that you knew made you a huge amount of money for every person that you sold it to and all it took is for you to spend a bit more time and money to sell it. You probably would try pretty hard to sell that thing as well. Here's how you can see this in action. Look for a company whose revenues are scaling at a phenomenal rate, but at the same time the company seems to not be turning a profit and their loss figure or their revenue.

Their profit figure is very, very stagnant. Let's use a real life example to make this easy here. Is a company called fiverr, not a popular stock on youtube or wall street bets, or i haven't heard anyone else talk about it, but it is my second biggest position at the moment. Their revenues have gone from 52 million dollars in 2017 to 252 million dollars in the last 12 months.

That's a five times, multiple in the revenues in just three and a half years, which is obviously very good, but now scroll down a little further to their net income. They are taking a nominal loss in each of those years, despite raking in all of that money. In revenue so what's happening here is the service that they're providing not good enough? Is it not making enough profit? Do they just suck at running their business? Well, their gross margin is 83 and growing. At the moment.

That's actually going up, so their gross profit over the last 12 months has been 209 million dollars. The question is: where has that gross profit disappeared? Well, let's look at their latest quarterly results from q2 this year, for a few more detailed indicators, the gross profit. There is 62 million dollars and 38 million dollars out of that has been spent on marketing, that's 61 of the entirety of the gross profit and every quarter. The proportion of the profit that fiverr is spending on marketing is increasing.

In fact, when you study the financials deeper, you can see that after r d cost and admin cost are deducted, the company goes and spends everything that they have on marketing every single quarter and then, after doing that, they then borrow some money and they spend that. On marketing too, and that marketing brings in a fast growing number of customers, those fast growing number of customers bring in a fast growing amount of revenue. I'm not going to go into the depths of how fiverr commercial model operates and works in this video, because i have other videos where i cover that and i will be talking about them again soon, but that marketing spend will earn several times itself in profit. In future years - and the company knows that this is a classic example of the company taking active steps to spend everything possible to grow that business, every single dollar they can to attract those new customers and to spend it not on anything.

But on active growth. That's getting customers in through the door in the quarter in which they are spending the money. If you look at their financials without understanding this, what they are doing, the financials look really weak and really poor, but take a bit of time to study what's happening under the bonnet and the picture looks very different. Okay, let's move on to the second sign that the company might be a killer investment, and this one is even less obvious, but it is one of the most powerful and this one is a focus on continuous growth trajectory jumps.

Let me explain this one, because it's a little bit wordy whenever a company releases a service or a product or scales of their production or something there is a natural trajectory that this product or service will follow for very successful products. The cumulative trajectory revenues profit adoption. Whatever it is that you want often looks like one of two types of curve, a sort of log graph or an s-curve, and if you are investing in a company early on in either of those curves, it can be very exciting because those early parts of the Growth are steep, but eventually the rate of growth, flattens and declines. That is a natural tendency.

A hyper growth company, though, will find ways of jumping from one of those curves to the next curve and building each of those curves in turn, so that they can jump when the point of inflection starts to happen when the rate of growth begins slowing down, or They have maxed out the last set of developments. They are ready to make the next leap. They don't just wait until things get to the stagnation phase or anywhere near the stagnation phase. Let's take tesla as an example.

Their early success was based on the model s, but while they were learning how to scale production, while they were learning how to build it, they weren't uh sleeping they were busy developing their next big leap, which was the model 3 and they launched the model 3. In july 2017., almost immediately pretty much as soon as they lost a model. 3 tesla started work on their next tangent. They began building a much bigger and much more modern factory over in china to complement the one they already had in california and that factory developed uh over the course of about a year from when they broke ground and was opened in december 2019.

Only weeks after that, shanghai factory opened and before it had the chance to do any kind of production, ramping tesla was already working on the next curve. They were working on berlin and austin factories. These are due to open in the next few weeks, and my expectation is that pretty much immediately after that happens, tesla will start the construction of phase two production lines in both of those factories, and they will also start building new giga factories at some point next Year and then there's the energy business that elon plans to make bigger than the car business the new car model software. They want to sell to all the other car manufacturers and a million other things all of these, offering new opportunities to jump onto the next growth curve, rather than just maximizing the existing one, each single time they reach an inflection point on a previous curve.

The next sign is going to be a little controversial, but if you take away my personal preferences, this is a very powerful investing signal, and this is one where you have to think of yourself as an investor without taking your personal biases into consideration again. This does apply a lot more in some sectors than others, for example in tech. But if a company shows over a period of time that they are perpetually walking a few steps ahead of the competition as the leader of change as the leader of shift in how customers interact with our product or service, that is often a very, very powerful. Sign of that stock dominating some companies are particularly good at this, and apple is probably one of the best examples whether you like it or not.

Apple has been dragging the rest of the industry with it with tech developments over decades and very long time. Scales are probably not that useful to look at here, because the tech, the engineers who brought about the mouse for apple and the first retail oriented computer several decades ago, are not the same as the engineers, the tech, etc. That are developing the m1 max system. On a chip that apple presented yesterday, but if you look over the past 20 years, the writing has been on the wall.

Apple has revolutionized the music player industry. Then they made a complete step change in developing the iphone. Then they continue to lead with important but less noticeable innovations. All the time like things like the app store and as an investor, it pays to look for the little things as a driver of a change in behavior of market change.

Apple will bring out changes that all of their competitors and critics will ridicule and laugh at, but then a year later they will all go and adopt and do the exact same thing look at some of the recent changes. Adding the notch and removing the headphone jack are things that i personally do not like, but apple have kept pushing for newer and better tech and trying to improve the ways that the customers interact with their products and, after a huge amount of criticism, everybody else pretty Much went and did the exact same thing. The latest moves where the unique all-in-one processor, memory and gpu systems in laptops is just another step on that journey, and that is a big part of the reason why apple's share price is now 45 times higher 45 times higher than on the day they announced that First iphone in 2007.. The next sign is one of my personal favorites and one that is probably most often missed by both professional and retail investors.

I absolutely love finding companies that sell the best shovels for the biggest gold rush. This sign requires you to find two things: the biggest gold rush opportunities and then do some research to really understand who is just barking and trying to sell random, pointless stuff at the foot of the mountain and who's actually making those really good shovels, because, as the Old saying goes: the guys who end up making the big bucks in a gold rush are not the ones that are going up the mountain. It is the shovel sellers at the bottom. There are a few really good examples here, so i'm going to go through them.

Take the development of the internet internet of things apps and all of that in the online space. The need for well-structured cloud computing to host and present and provide all of this has been exploding, and it will continue to explode for a long time and at the foot of that big mountain amazon promptly went and set up their aws shop. You probably don't even know that it exists if you're not into amazon or into cloud computing, but that is one of the services they provide. They've become the industry leader in providing those cloud computing shovels, and here is an amazing statistic in the last quarterly report.

54 of amazon's operating income came from aws yeah more than half another example that is flowing below the radar. As in a good example, is sony. They have developed the best photo and video tech in the world and are now very busy selling the that tech as shovels. The most popular and the most marketed features of phones at the moment are cameras and half of all the phones in the world use sony.

Camera sensors, including the latest iphone 13. most people buying the iphone, probably have no idea and most likely do not care at all, but that shovel enables apple to spend half of its major iphone announcement. Talking about how good and how impressive their camera is. The camera that was sold to apple as a shovel to sell their phones by sony, and we are now entering a new era where data is the latest gold rush, and this one is only just getting started and the one company that is soaring above the rest.

With the technology they provide to aggregate data, manage data and then use it effectively and that company is palantir. The company is still in very early stages of growth, but their foundry product is streets ahead of anything else on the market and it is a shovel that lets airlines optimize their fleet management to save a huge amount of money and reduce disruption. And, at the same time, the us government to optimize its military spending all right next sign, is really interesting and can be very easily misinterpreted. I love companies that operate as a steam train with blinkers.

Sometimes you see a company just go on a mission. They pick a direction, they restructure everything they completely just stop at nothing to change direction. They stop being bothered by what their competition is doing. They don't care what the media thinks of them.

They put on the blinkers and they just get cracking and then the steam engine cranks up and just keeps accelerating before you know it, it is powering so far ahead. Nobody really knows how to catch up. If the direction the company is picked is right and the steam engine is well built, this can be a really deadly combination. In the last few years, amd has been a very good example of this track.

Pun intended amd's, ceo lisa, joins the company in 2014, when the share price was in the doldrums and intel was the absolute faraway dominant chipmaker and she began making some huge changes on how the company operates and their direction. The blinkers went on and amd began working on new processors in new ways. First, they got close, then they got closer. Then they got better.

Then they suddenly are absolutely miles ahead of intel and that gap is widening. The train is still picking up. Speed amd is scaling processors like no tomorrow they're working on ever smaller technology in terms of gaps, they're offering 3d transistor stacks and absolutely insane relative levels of performance, while intel still can't compete with amd's processors from a few years ago, in the last few months, they've Begun taking over the cloud computing space which is going to result in some really interesting earnings and the share price is exploding, rightly as a result, a classic case of just getting to work and letting the results speak for themselves. So there you go.

These are the five signs that i personally look for when investing in companies. These may not be as obvious as checking if the pe ratio is less than 15, but for me these are far more useful and deliver far better results. If you enjoyed this video, please don't forget to smash the like button for the youtube algorithm. Thank you so much for watching.

I really appreciate it and, as always i'll see you guys later.