Tickers in this Article: WMT, DO, WLT, INTC
A good investment outcome has less to do with what you buy and more to do with the price you pay. A company of the highest quality can create poor investment results if bought at the wrong price. Shares in Wal-Mart (NYSE:WMT) bought at the beginning of 2000 are down over 10% as of now. This is despite that fact that sales and profits have more than doubled. The reason is that in 2000, shares in Wal-Mart were trading for over 40 times earnings.

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See-Saw Market
On any given day, today's markets will climb or drop significantly solely based on what comes out of Europe. To approach investing successfully in this type of environment, stick to buying quality names at good prices. The best way to ensure that a good price is being paid is to buy quality issues on market dips. This week's news from Intel (Nasdaq:INTC) that its quarterly revenues would come in below guidance sent shares down by over 4%. As a result the company's share price, which was attractive to begin with, became better. Trading at $24, shares yield 3.4% and trade for 10 times earnings.

Cheap Quality: A Rare Combination
An opportunity to buy quality businesses at attractive prices happen every so often. The opportunity to buy coal producer Walter Energy (NYSE:WLT) for $63 could bode well for patient investors. Walter primarily produces met coal, the higher quality coal used in the production of steel. Met coal commands a much higher price than thermal coal that is used by utilities to generate electricity. Shares in Walter have fallen hard this year from $143 a share as production issues and a weak steel environment have hurt operations. But, met coal reserves are hard to come by and Walter's high quality reserves will lead to tremendous profits. Oil rig contractor Diamond Offshore (NYSE:DO) is another high quality name that will reward patient investors. Shares are trading at $58 valuing the business at $8 billion or $8.7 billion when you count the debt. The business generates rich margins and tons of free cash flow. At current prices, shares are valued at less than 5 times EV/EBITDA.

The Bottom Line
The saying that money is made when at the time an asset is bought carries a lot of worldly wisdom. When purchased at attractive prices, not a lot has to happen in the economy or market sentiment for the investment to deliver a satisfactory result.

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At the time of writing, Sham Gad did not own shares in any of the companies mentioned in this article.

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