Here is a simple rule that helps identify companies that will deliver 20%+ profit growth on a PORTFOLIO level in 3-5 year horizon. Rule: “Select all companies that have delivered more than 14% ROE and 20% revenue growth in at least 7 of the last 9 years”. This rule has generated 20%+ annual return when tested on rolling basis from 2000 to 2023.
Below is the list of the companies that appeared in FY23:
Hindustan Foods
SBI Cards
Avenue Super.
Lancer Containe.
Husys Consulting
Aditya Vision
Share India Sec.
Beta Drugs Ltd
Route Mobile
Affle India
Aaron Industries
Sigma Solve
Clean Science
This list contains both small and large companies.
For more detailed rules and examples, check out this thread on investment rules where we discuss best investment-rules in India tested across market cycles over the last 25 years.