Investing - Buying Fundamentals

At FoundryStrat, our Fundamental Investing approach focuses on identifying companies with strong earnings power and solid financial foundations. We analyse key metrics such as earnings and revenue growth, valuation ratios like P/E and PEG, and indicators of balance sheet strength including cash reserves and debt levels.

By combining these insights with analysts’ forecasts for future growth, we aim to uncover businesses that are undervalued relative to their potential.

Our goal is to make these concepts clear and actionable—breaking down what each ratio means, how to use it effectively, and how to spot companies that can deliver sustainable long-term returns.

This is one of the hardest disciplines in investing - because there's so much to look at and review - Profit, Cash, Assets, Debts, Growth - the whole business operation and its balance sheet. Where do you even start. We like a framework called PEG - Price dividend by Earnings Growth - It was Mark Slater who wrote a book called the Zulu Principle which combines PEG to bring a number of other checklists into play. The book is a little old now but has some timeless principles - here's our own take....

Core Idea

The title comes from Slater’s observation that “if you read everything you can on a narrow subject, you quickly become an expert.”
Applied to investing, it means focus deeply on a specific niche rather than trying to know a little about everything.

Key Takeaways

Specialisation = Edge
Focus on a narrow area (e.g. small-cap growth stocks) where you can understand the dynamics better than the crowd. Deep knowledge gives you a real advantage.
Growth Matters Most
Slater prioritises earnings growth as the single most important driver of share price performance. Seek companies with consistent, above-average EPS growth.
Use the PEG Ratio
One of his major contributions — the PEG ratio (P/E divided by earnings growth) helps identify growth at a reasonable price.
- PEG < 1 often signals value relative to growth potential.
Financial Strength is Non-Negotiable
Avoid overleveraged companies. Look for strong balance sheets, good cash flow, and manageable debt — growth is only sustainable if it’s well-financed.
Look for Quality of Management
Back ambitious, capable management teams with a clear strategy and meaningful shareholdings — alignment of interests matters.
Timing & Momentum
Combine fundamentals with technical confirmation. Even a good company can be a bad investment if you buy too early. Wait for price strength to confirm your thesis.
Small Companies = Big Opportunities
Slater believed private investors have an advantage in small and mid-caps, where institutions are less active and information is less efficiently priced.
Continuous Learning & Focus
Keep refining your process, reading reports, and narrowing your expertise — this is the essence of the Zulu mindset.

In Short

The Zulu Principle is about niche focus, disciplined use of growth and value metrics (like PEG), and backing strong companies early in their growth phase, while maintaining financial and psychological discipline.

If you’re a business, talk about how you started and share your professional journey. Explain your core values, your commitment to customers and how you stand out from the crowd. Add a photo, gallery or video for even more engagement.

Here's How We've Used It...

Volex has been held in FoundryStrat's long term portfolio for many years.

Volex is a UK-based global manufacturer that designs and supplies power cords, cable assemblies, and connectivity solutions for a range of end markets.

The business operates across four main segments:

Electric Vehicles (EVs): Cables and charging solutions for electric cars and charging infrastructure.
Consumer Electricals: Power cables and assemblies for household appliances and electronics.
Data Centres: High-speed data and power cables for servers and networking equipment.
Medical & Industrial: Custom cable assemblies for medical devices and industrial automation systems.

It was bought on a PE of around 8x and earnings were growing around 15% at the time. The PEG was therefore around 0.5 which is firmly in the 'good value camp'. We thought the company had strong leadership qualities and operated in a specialist market which was fast growing - especially in the EV space. It ticked the majority of the 8 criterion above and over the last 6-7 years has annualised over 20%.

How do you find these stocks?

You need a screening tool. There's a huge array of tools out there. Some are free like Yahoo but if you're serious about this, we'd recommend using something like Stockopedia. They have a specific Zulu Screen embedded in the website. But you can also create your own....

Build Your
Trading & Investing
Strategy

Follow FoundryStrat Ideas Suited
to Your Strategy

Investing - Buying Fundamentals

Core Idea

The title comes from Slater’s observation that “if you read everything you can on a narrow subject, you quickly become an expert.”
Applied to investing, it means focus deeply on a specific niche rather than trying to know a little about everything.

Key Takeaways

Specialisation = Edge
Focus on a narrow area (e.g. small-cap growth stocks) where you can understand the dynamics better than the crowd. Deep knowledge gives you a real advantage.

Growth Matters Most
Slater prioritises earnings growth as the single most important driver of share price performance. Seek companies with consistent, above-average EPS growth.

Use the PEG Ratio
One of his major contributions — the PEG ratio (P/E divided by earnings growth) helps identify growth at a reasonable price.

PEG < 1 often signals value relative to growth potential.

Financial Strength is Non-Negotiable
Avoid overleveraged companies. Look for strong balance sheets, good cash flow, and manageable debt — growth is only sustainable if it’s well-financed.

Look for Quality of Management
Back ambitious, capable management teams with a clear strategy and meaningful shareholdings — alignment of interests matters.

Timing & Momentum
Combine fundamentals with technical confirmation. Even a good company can be a bad investment if you buy too early. Wait for price strength to confirm your thesis.

Small Companies = Big Opportunities
Slater believed private investors have an advantage in small and mid-caps, where institutions are less active and information is less efficiently priced.

Continuous Learning & Focus
Keep refining your process, reading reports, and narrowing your expertise — this is the essence of the Zulu mindset.

In Short

The Zulu Principle is about niche focus, disciplined use of growth and value metrics (like PEG), and backing strong companies early in their growth phase, while maintaining financial and psychological discipline.

If you’re a business, talk about how you started and share your professional journey. Explain your core values, your commitment to customers and how you stand out from the crowd. Add a photo, gallery or video for even more engagement.

Here's How We've Used It...

Volex has been held in FoundryStrat's long term portfolio for many years.

Volex is a UK-based global manufacturer that designs and supplies power cords, cable assemblies, and connectivity solutions for a range of end markets.

The business operates across four main segments:

Electric Vehicles (EVs): Cables and charging solutions for electric cars and charging infrastructure.

Consumer Electricals: Power cables and assemblies for household appliances and electronics.

Data Centres: High-speed data and power cables for servers and networking equipment.

Medical & Industrial: Custom cable assemblies for medical devices and industrial automation systems.

How do you find these stocks?

You need a screening tool. There's a huge array of tools out there. Some are free like Yahoo but if you're serious about this, we'd recommend using something like Stockopedia. They have a specific Zulu Screen embedded in the website. But you can also create your own....

www.stockopedia.com

Other websites that we've used include

www.sharescope.co.uk

and our Favourite charting tool also has strong fundamental metrics embedded.

www.tradingview.com

Investing - Buying Fundamentals

Core Idea

The title comes from Slater’s observation that “if you read everything you can on a narrow subject, you quickly become an expert.” Applied to investing, it means focus deeply on a specific niche rather than trying to know a little about everything.

​

Key Takeaways

Specialisation = Edge Focus on a narrow area (e.g. small-cap growth stocks) where you can understand the dynamics better than the crowd. Deep knowledge gives you a real advantage.

Growth Matters Most Slater prioritises earnings growth as the single most important driver of share price performance. Seek companies with consistent, above-average EPS growth.

Use the PEG Ratio One of his major contributions — the PEG ratio (P/E divided by earnings growth) helps identify growth at a reasonable price.

PEG < 1 often signals value relative to growth potential.

Financial Strength is Non-Negotiable Avoid overleveraged companies. Look for strong balance sheets, good cash flow, and manageable debt — growth is only sustainable if it’s well-financed.

Look for Quality of Management Back ambitious, capable management teams with a clear strategy and meaningful shareholdings — alignment of interests matters.

Timing & Momentum Combine fundamentals with technical confirmation. Even a good company can be a bad investment if you buy too early. Wait for price strength to confirm your thesis.

Small Companies = Big Opportunities Slater believed private investors have an advantage in small and mid-caps, where institutions are less active and information is less efficiently priced.

Continuous Learning & Focus Keep refining your process, reading reports, and narrowing your expertise — this is the essence of the Zulu mindset.

​

In Short

The Zulu Principle is about niche focus, disciplined use of growth and value metrics (like PEG), and backing strong companies early in their growth phase, while maintaining financial and psychological discipline.

If you’re a business, talk about how you started and share your professional journey. Explain your core values, your commitment to customers and how you stand out from the crowd. Add a photo, gallery or video for even more engagement.

​

Here's How We've Used It...

Volex has been held in FoundryStrat's long term portfolio for many years.

Volex is a UK-based global manufacturer that designs and supplies power cords, cable assemblies, and connectivity solutions for a range of end markets.

The business operates across four main segments:

​

Electric Vehicles (EVs): Cables and charging solutions for electric cars and charging infrastructure.

Consumer Electricals: Power cables and assemblies for household appliances and electronics.

Data Centres: High-speed data and power cables for servers and networking equipment.

Medical & Industrial: Custom cable assemblies for medical devices and industrial automation systems.

​

​

How do you find these stocks?

You need a screening tool. There's a huge array of tools out there. Some are free like Yahoo but if you're serious about this, we'd recommend using something like Stockopedia. They have a specific Zulu Screen embedded in the website. But you can also create your own....

​

www.stockopedia.com

​

Other websites that we've used include

​

www.sharescope.co.uk

​

and our Favourite charting tool also has strong fundamental metrics embedded.

​

www.tradingview.com

The title comes from Slater’s observation that “if you read everything you can on a narrow subject, you quickly become an expert.”
Applied to investing, it means focus deeply on a specific niche rather than trying to know a little about everything.

Specialisation = Edge
Focus on a narrow area (e.g. small-cap growth stocks) where you can understand the dynamics better than the crowd. Deep knowledge gives you a real advantage.

Growth Matters Most
Slater prioritises earnings growth as the single most important driver of share price performance. Seek companies with consistent, above-average EPS growth.

Use the PEG Ratio
One of his major contributions — the PEG ratio (P/E divided by earnings growth) helps identify growth at a reasonable price.

Financial Strength is Non-Negotiable
Avoid overleveraged companies. Look for strong balance sheets, good cash flow, and manageable debt — growth is only sustainable if it’s well-financed.

Look for Quality of Management
Back ambitious, capable management teams with a clear strategy and meaningful shareholdings — alignment of interests matters.

Timing & Momentum
Combine fundamentals with technical confirmation. Even a good company can be a bad investment if you buy too early. Wait for price strength to confirm your thesis.

Small Companies = Big Opportunities
Slater believed private investors have an advantage in small and mid-caps, where institutions are less active and information is less efficiently priced.

Continuous Learning & Focus
Keep refining your process, reading reports, and narrowing your expertise — this is the essence of the Zulu mindset.