Every investor would love to stumble upon the perfect stock. But will you ever really find a stock that provides everything you could possibly want?
One thing's for sure: You'll never discover truly great investments unless you actively look for them. Let's discuss the ideal qualities of a perfect stock and then decide whether Fidelity National Financial Inc (NYSE:FNF) fits the bill.
The quest for perfection Stocks that look great based on one factor may prove horrible elsewhere, making due diligence a crucial part of your investing research. The best stocks excel in many different areas, including these important factors:
With those factors in mind, let's take a closer look at Fidelity National Financial.
|Factor||What We Want to See||Actual||Pass or Fail?|
|Growth||5-year annual revenue growth > 15%||5.7%||Fail|
|1-year revenue growth > 12%||48.8%||Pass|
|Margins||Gross margin > 35%||58.3%||Pass|
|Net margin > 15%||8.4%||Fail|
|Balance sheet||Debt to equity < 50%||28.3%||Pass|
|Current ratio > 1.3||2.97||Pass|
|Opportunities||Return on equity > 15%||14.4%||Fail|
|Valuation||Normalized P/E < 20||10.62||Pass|
|Dividends||Current yield > 2%||2.6%||Pass|
|5-year dividend growth > 10%||(13.5%)||Fail|
|Total score||6 out of 10|
Since we looked at Fidelity National Financial last year, the company has picked up a point, as its revenue climbed sharply compared with last year's contraction. The stock has jumped 45% over the past year as a reawakening in the housing market helped boost its prospects.