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Creating a Portfolio Like Warren Buffett: A High-Return Investment Strategy by Jeeva Ramaswamy

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CHAPTER 22

Stock Research Checklist—Infosys

To understand the stock research checklist a bit better, here is an example that uses Infosys Limited.1 In this example, we will look at how the company scores against each of the research checklist items. Infosys Technologies Ltd. was founded in 1981. It provides information technology (IT) development and consulting services worldwide through onshore and offshore execution methods. The company performs most of the offshore development activities from India. The shares trade on the Nasdaq market under the symbol INFY as an American Depository Receipt (ADR). The stock price of the stock was $74.53 per share in December 2010.

Are You Able to Understand the Business Thoroughly? Is It a Simple Business?

This checklist item has two questions. First, does the company operate a simple business? Infosys is operating in the technology field providing information technology services, but the nature of the business is very simple. Companies need to have an information application to manage the business effectively and improve the productivity of the business. Even when the company is small, it needs software applications to manage the business effectively. Companies need a service provider to develop those applications and maintain them. Since most of the software development activities are performed in India, they can reduce the cost of the company compared with the U.S.-based IT firm.

When the company satisfies a particular checklist item, we ...

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