Rule One Investing Blog

I’m taking a close look at the stock list that I created from last post about creating a meaningful stock list.  I’m going to go through the specific stocks and eliminate stocks that don’t fit the Rule #1 criteria.  The criteria I’m using are

• 7 years+ of history
• 10% Return on Investment Capital (ROIC) for the 5 year and 1 year numbers
• 10% Equity growth rate
• 10% EPS growth rate
• 10% sales growth

I’m not specifically going to discuss the margin of safety, sticker price, moat or management.  As well, I’m going to be less harsh on EPS and sales growth.  I’m doing this so that I can keep these companies in my radar and have a closer look at these companies in the future.

• Sports
  • Nike (NKE)
    • Yes
  • Timberland (TBL)
    • No – ROIC 7$ last year & Equity less then 10%
  • Sketchers (SKX)
    • Yes
  • Crocs (CROX)
    • No – Less then 7 years of data
  • Deckers (DECK)
    • Yes – but EPS less then 10% last year
  • KSwiss (KSWS)
    • Yes – but EPS and sale less then 10%
  • FootLocker (FL)
    • No – ROIC less then 10%
  • Under Armour (UA)
    • No – Less then 7 years of data
  • Calaway (ELY)
    • No – ROIC less then 10%
  • Harley Davidson (HOG)
    • No – Use to be a Rule #1 stock but with diminishing growth rates the past few years it is removed from our radar.
  • Brunswick (BU)
    • couldn’t find data on Brunswick
  • Polaris (PII)
    • NO – Lower then 10% on Equity, EPS, Sales
  • Pool Corporation (POOL)
    • Yes – But Equity 1% last year
  • Jakks Pacific (JAKK)
    • Yes
  • Artic Cat (ACAT)
    • No – ROIC less then 10%
  • Columbia Sports Wear (COLM)
    • Yes
  • Dicks Sporting Goods (DKS)
    • Yes – but only 5 years of data
  • Volcom (VLCM)
    • No – but with the numbers being put up could be worth a second look as a risky business
  • QuikSilver (QZK)
    • No – ROIC less then 10%

This is considered step two of my stock selection process.  I’m left with eight potential rule #1 companies.  Now the hard work begins, determining if each of these companies has some sort of moat, margin of safety and managment.  One ‘M’ and three to go.