![]() Lynch’s favourite companies tend to be low-cost, low-leverage operators that avoid boardroom extravagance and managerial hierarchy. Finding undervalued stocks will usually involve looking for great companies in out of favour industries. Lynch says it is difficult to lose when we buy great companies that trade at 3-6 times earnings. Like most value-oriented investors, Peter Lynch likes to buy stocks at reasonable prices in companies whose sales and earnings per share are increasing at attractive rates. “If you like the store, chances are you’ll love the stock” Peter Lynch, Beating the Street This includes what he looks for in investment opportunities, where to go prospecting and how he undertakes investment research. In this post, we will review some of the lessons we took away from Lynch’s book. The book offers an educational and accessible introduction into constructing a sound investment portfolio. Lucky for us, Peter Lynch has generously described his investment style in his 1993 book Beating the Street. The S&P500 achieved less than half of that during the same period (between 1977 & 1990). During his 13 years as money manager for Fidelity’s Magellan Fund, the fund achieved an annual return of 29% per annum. Fidelity’s Peter Lynch falls right into this category. To invest effectively, it probably helps to learn as much as possible from the very best investors. ![]()
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