Here's one way of finding great investments

Find out the qualitative factor that could have helped you find companies with returns over 70%

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

How do you find your investments and share market picks?

Many people use stock screeners such as the one offered by Commsec from the Commonwealth Bank of Australia (ASX: CBA)

They might look for companies with low PE ratios, high dividend yields and high returns on equity. With hundreds of companies listed on the ASX, it might be a start in filtering out the noise but it has no guarantees of helping you identify the best companies out there.

One metric that I like to consider when I select an investment is work culture. I like to understand what the employees of that company say about their experience working there and which are the best companies to work for.

Here's why I think it's important:

Employees are insiders. They know more about what is going on inside the company on a daily basis which could be more valuable than the periodic disclosures made by the company.

Employees implement the plan. Great businesses and strategies are meaningless without the right employees to execute the plan.

Top talent want to work in the right culture. The best businesses attract and retain the best talent. The best talent places a premium on working for a company with the right work culture.

Work culture is intangible. At a time when algorithms and artificial intelligence can be used to screen for shares, I think retail investors have a better chance of outperforming by identifying the qualitative factors that make a company great. Work culture is a part of that.

Here are some companies that were identified by LinkedIn as part of the top 20 best places to work in Australia and their share price performance on the last 5 years:

  • Macquarie Group Ltd (ASX: MQG). Its share price is up 155%.
  • Lendlease Group (ASX: LLC). Its share price is up 73%.
  • Cimic Group Ltd (ASX: CIM). Its share price is up 145%.

Foolish Takeaway

It's not every company with a great work culture that will outperform the market. For example big banks Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd. (ASX: NAB) were on the list by they underperformed over the last 5 years. 

I do think however that qualitative factors such as work culture are very much worth considering among other factors before deciding to invest in a company.

Motley Fool contributor Kevin Gandiya has no position in any of the stocks mentioned. You can follow Kevin on Twitter @KevinGandiya. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »