1) Business nature: Is there a never ending demand for it’s goods or services? Is the business easy to understand?
2) Dividend payout history: Is there consistent dividend payout annually? How often are dividends paid?
3) Dividend payout ratio: How much earnings are retained for organic growth, debts and paid to shareholders? Can shareholders invest in the business and be paid above treasury bonds earnings?
4) Current and historical profit margins: Are profit margins increasing, stable or decreasing? What are reasons for the change?
5) Current and historical ROE: Is ROE increasing? Did ROE increase due to higher leverage, share buy back or simply the company is generating more value for shareholders?
6) Current and historical PE: Is the firm too expensive to buy now?
7) Comparing business competitive advantage with industry's competitors: What are the business threats and opportunities in current environment? Are there high entry barriers to deter competition? Are they subjected to global competition? Is it a monopoly or market leader?
8) Current ratio: Is growth propelled by borrowing more money?
9) NAV: Is there a chance I can buy the company at a discount of NAV?
10) Management team: Is there good corporate governance in place? Does the management team own shares of that company?
11) Diversified earnings: Are earnings obtained from various sources and regions?
12) Government support: Does the government support the business? Is Temasek a shareholder of the company?
13) Trading volume (liquidity): Is the stock actively or thinly traded? Can I liquidate my stocks when I can investment the money in higher yielding investments?
14) Stock price volatility: Is the stock subjected to local and foreign institutions indiscriminate buying and selling? Does the stock price volatility reflect the nature of the business? Do I need to constantly the stock price?
15) Growth prospects: Can the business grow it’s earnings consistently?
16) Share buy back: Does the company have the mandate to buy back it's shares to stablise it's share price?
If the business can match at least 10 of the above criteria, it is likely I will invest in the stock. Actually most importantly, I must understand the business.