Equity Quality

Overview

Quality is hard to define, and the word does not have a solidly defined definition within the equity investing world. At a basic level, quality companies are well designed and exhibit desirable qualities. This is contrast to the a value company, which could be a low qaulity company that is selling at a discount.

When discussing quality of an equity investment, quality is typically meant to refer to the company's financials or market position, rather than an attribute of its products, although many investors will include product considerations in their assessment of quality.

“It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
-Warren Buffett

Quality Factors

• Earnings Stability
• High Returns on Capital
• Favorable Industry Position (see Porter)