VIFL
August 23, 2017, 4:26am
124
@arvind.calyx You asked for advice from a ‘senior’, so here it is…
basumallick:
Please read The Five Rules for Successful Stock Investing by Pat Dorsey. It is an excellent manual for investors and gives the best introduction on how to go about analysing a stock.
First try to understand the business by reading their annual report for last 3-5 years (atleast 3 years). Go through any brokerage reports that you may get about the company. Just don’t look at the target price on the brokerage reports
Look for basic hygiene factors like ROE, ROCE are high; Debt/Equity is low; company makes consistent operating cash flows and profits.
Once you get a hang of what the company does, try to see if you can understand and project a range of sales and profit for the next 1-2 years. Assign a reasonable (start with being conservative) PE and see how the stock price might look like a year or two down the line.
In case you have already read Five Rules, go through this thread to find out about the other books you need to read My Top 5 Investment Basics Books, & why?
Also take your own advice to jstocks, & go through various threads on valuepickr (under categories like Investment Learning, Investing Strategies, Accelerated Learning) where people have shared their knowledge on analyzing & valuing businesses, and portfolio building.
Good Luck! You will need it!
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