Getting ideas is not difficult these days. I guess most of companies out there are covered on VP also. Sources of ideas is often meeting/interacting with other investors, some or other research reports (which should always be a starting point only and not to be acted upon immediately), technical picks (many of these often have some strong business tailwinds behind them on deeper digging) etc.
How to take these ideas forward is mostly the question. Firstly I try looking at gross obvious negatives like too much debt, dodgy promoters, lots of pledging, poor financials and balance sheet, low opportunity size as compared to market cap etc. Any or a combination of these would help me in rejecting these ideas immediately.
Companies passing the above filters are the candidates for further work. It begins with cursory look at financials where a first look at screener does give some idea about where the co has gone in the past few years. I dont outright reject companies which have not gone anywhere in past few years bcos there are some sleepy companies which may be on verge of waking up and running hard. Screener gives me an idea about market cap, Book value, quarterly and annual results at a quick glance.
Next comes downloading past few years (sometimes even a couple of them suffice) annual reports and looking at what management has been talking and what it actually has been doing. Annual reports also provide insights into the business of the company and the financials of the company . I tend to check the financial figures from official documents from the company rather than relying only on research reports or figures from screener or similar website.
Doing all this provides with a picture of the business quality and management quality of the company. Next step is to figure out what are the investment triggers for the company going ahead. Sometimes it is there in the form of quarterly numbers, or sectoral tailwinds, impending expansions, progressive reduction of debt, etc.
A step further is to go through the concalls/presentations/management tv interviews etc provided on researchbytes or on co website or elsewhere.
If the company is well covered by analysts then it helps to go through some of them though most of them are copy paste kind of jobs though some of them are really good. If the co is not that well covered then its all the more better and likely to provide better returns if the gap between perception and performance is big.
After doing all this the final step is to write down a short 1-2 page write up which I usually use in my stock stories on companies I have put up. e.g Jagran. This write up should cover the business of the co, financials (which include last few years and quarters figures, balance sheet items like debt etc, promoter holding, pledging etc, MF/FII holding if any, market cap, return ratios etc). And investment arguments and risk factors. One of the things that can be included could be the reason to sell the company. (whenever that happens) I have yet to do the latter.
Once all this is done, then if valuations are attractive then I tend to buy the company usually in a single shot. Sometimes it takes longer.
One of the things I usually missed was averaging on the up as the story tends to improve. I am gradually getting over this problem as I add more to some companies where story does tend to improve and valuations still remain attractive inspite of stock price run up mainly due to improving financial results.