- Don't confuse rebounds with long-term trends
- Are management targets realistic or too ambitious?
Our two companies are useful case studies in going through the questions investors must ask themselves before buying shares. One company is a US media conglomerate with some growth areas, but the whole isn’t as attractive as some of the parts. The other is something of an earnings recovery story, but all that is fully priced in and high competition and margin pressure should prompt pause for thought.
Electrical and white goods seller AO World (AO.) has an admirable business model but operates in a very competitive market place. The company's long-term challenges to growing margins could be hard to overcome. The shares made the recent Alpha earnings upgrade momentum screen but all this is arguably baked in now.
