Dear friends,
I am a growth investor and below is my current growth portfolio. I would really appreciate if you could provide me your feedback on it.
RSSOFTWARE R.S.Software India 20%
TORNTPHARM Torrent Pharmaceuticals 20%
CARERATING Credit Analysis And Research 15%
PEL Piramal Enterprises 15%
ARVIND Arvind 10%
AXISBANK Axis Bank 5%
BHARTIARTL Bharti Airtel 5%
YESBANK Yes Bank 5%
JUSTDIAL Just Dial 5%
I would suggest to exit from Bharti Airtel , and move into some good pharma stocks like aurobindo , lupin or torrent etc.
Hehe,
Just a brotherly suggestions.
If you are a growth investor, you should be ready with a table with roe, roce, pe, debt, expected future growth numbers for each and every stocks you own (This is minimum, one can have way many columns). That helps in getting rid of of slow growers and adding fast growers to your pf.
most potent formula for wealth creation…
1). buy at PE less than EPS growth rate(PE at 15 and company growing at 30% CAGR in terms of Profit and revenue) in other words buy at very small PEG ratio and let PE expand to the level of growth
2). Growth without quality is useless…look at consistent ROE, ROCE and better if they are expanding as a result of good quality management and some sort of growing sustainability and competitive advantage of business(Pat Dorsey books are best)
3). Growth obtained by acquiring debt(for acquisition or expansion) and increasing debt is dangerous. Go for Du pont equation of ROE as ROE can be enhanced by increasing debt to equity ratio. Look for low debt to equity of .7 or less…lowering debt to equity ratio and high interest coverage ratio for all the tym…
4). High PE is not always bad…pay a little more for quality…go thru all Sanjay Bakshi sir slides for increasing your success rate.
Look at quality business like Mayur, Ajanta and their trends…
One more thing go for high quality NBFCs stocks than quality PVT banks as NBFCs are still small compared to Banks and can grow at better rate than banks… NBFCs returns are better than Banks historically…
Disclosure: My portfolio- Ajanta, Cera, Mayur, Atul Auto, Astral, Kajaria, Bajaj Finance, Eicher and MPS…Dont follow me or any investor blindly. Go thru your own learning and invest with your own conviction
Not all growth are similar, and hence PE less than EPS growth rule cant be applied everywhere. Growth rate funded by huge debt is definitely worse than same grow rate funded by no debt. Growth which throws out lots of cash (which are then paid back to the investors as dividend) is way way better than the growth which need constant amount of cash to maintain the same rate of growth.
Investing in though, never fits into any nice formula, but yes there are some smarter way of earning money. As Basant Maheswari says, it is very very difficult to loose money investing in cos generating 30%+ ROE/ROCE consistently.
So it is better to target high ROE cos, which are also growing, and try to find bargain in them (which you seldom find !!!).
Regards,
-Subash
agreed Subash Nayak, but PEG less than 1 and improving fundamentals can give mind blowing returns…Ajanta comes into my mind…we never get page, asian paints at cheap valuation…they will become cheap when their business will become weak, but not at the present tym…
Sir, How do we compute the growth rate in a PEG ratio? Do we usually take in the CAGR % of the last 3 or 5 years and then divide it from the current P/E of the stock?
