Image source: Unilever Plc
As a long-term investor, I like the decades-long time frame where I invest my own invested individual pension (SIPP).
However, time can become a friend of long-term investors, but it can also cost a few mistakes.
For example, when you get a 20 or 30 year view, small annual fees or account management fees can suddenly appear large.
Here are three things investors should look for when finding stocks to buy for SIPP.
1. Continuous business related
Times change – and so are industrial and consumer needs. The business that used to be wasted.
If you doubt it, take a look at some of the companies featured in FTSE 100 Over the past 40 years.
PC manufacturer Amstrad? Paper Miller Arjo Wiggins Appleton? Trident Jet maker Hawker Sidery?
None of these exist as independent companies today.
However, other companies that have been on the FTSE 100 since the first day are J Sainsbury, shelland Unilever (LSE: ULVR).
It can be difficult to predict long-term business trends. However, I think some areas (such as food retailing and energy delivery) are likely to be here to stay in some way in the long run.
So, when buying SIPP stocks, I think a savvy investor will ask if the target share business area is likely to last for the long term.
2. Great sustainable business requires a competitive advantage
But just because the business sector endures it doesn’t mean that a particular company will stroll around.
To differentiate yourself from your rivals, your business needs some form of competitive advantage.
I think Unilever is a good example here.
Owns a variety of premium brands Hermann’s and pigeon This helps to set the product apart from its unbranded rivals. We also own unique products such as Marmite Similarly, they have developed their own product formulations and have a huge global distribution network.
Incidentally, that doesn’t necessarily mean it’s a consistently strong business. Inflation in ingredients is digging into profit margins, but having three chief executives within two years could mean unstable business performance over the coming months and years.
Certainly, I would be happy to buy SIPP Unilever stocks at a reasonable price, but for now the company is too expensive for my taste given such risks.
However, the company explains something I’m looking for when finding stocks to buy for my SIPP: sustainable competitive advantage.
3. Rating, rating, rating
Even if I like the company, it may seem surprising that I don’t want to buy Unilever stocks.
However, most people will not buy the car or house they like if they don’t find it attractive.
For me, it’s the same as investment. good work It’s not necessarily equivalent to good investment. In fact, it can be awful. It depends on what you pay to invest in it.
So when evaluating the stocks that you might buy, I everytime Ask them if they are rated attractively.