Below are the parameters that I check before investing in a stock:
Market Cap (in Cr)
Category of stock (Fast grower, slow grower, cyclical etc)
Current PE (<40)
Median PE
Long term chart pattern (up/down/sideways)
Stage analysis (1,2,3 or 4)
Sales growth (CAGR 3years>12%)
Net Profit growth(CAGR 3years>10%)
Debt to equity < 0.7
Retail Public Holding < 25%
Promoter holding <=75%
PEG ratio < 1.5
P/B < 1.5 (for B2B)
Gross Profit Margin (steady)
Operating Profit Margin (steady or increasing)
Interest coverage ratio (>5)
ROE (>15% (3 years))
Share price graph (upward)
Promoter pledge(<5%)
Revenue growth > 10% (over 5 years)
45<RSI<75 (RSI<30 means oversold, >75 means overbought)
ROCE (>20%, 3 years)
EV/EBITDA (<22)
CFO/EBITDA (60% +)(Check for 1,3,5 years)
CFO/PAT (>90%,higher the better)
Contingent liability as a % of net worth/equity (<5%)
Concalls conducted regularly
Goodwill as a % of total assets (<20%)
Auditor’s report : Clean?
Company misallocating capital?
Dividends paid regularly?
Micellaneous expenses as percentage of other expenses (<6%)
Auditor resigned?
Total asset turnover (last 5 years)
Net fixed assets turnover (last 5 years)
Estimated revenue growth
Discrepancy in remunerations of the management
Trade receivables as a percentage of sales (<20%)
Working capital days decreasing?
ADX (>25 on Tradingview)
Vstop (Green, upwards (Weekly/Monthly) on Tradingview)
Relative Strength (RS > 80 on Market Smith)
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