Hope you are taking good care of yourselves and your families.
I have been working on a Stock Selection Framework for myself for sometime now.
It’s supposed to give us shortlists for Multi-Baggers in any geography once it’s complete.
Here is the draft of the Pole Star Stock Selection Model ^
I have put various parameters into 7 buckets.
L - Large - Sufficiently Large market cap, large market share, large revenues, large profits, large ROCE, large ROE, large CFO and FCF generation.
A - Adaptable - Adaptable and growing for last 5-10-20 years continuously. Growing Sales, Growing Profits, Growing EPS.
S - Strong - Zero debt, high cash flow generation from operations, no pledging of shares - strong balance sheet. strong cash flows
T - Tough - When market goes down, they don’t go down that much. They find new ways to generate business in tough times and cut costs, thereby increasing top line and bottom line both. They are able to find favourable long-term economics
I - Innovative - Innovative use cases, innovative products, innovative marketing, innovative distribution
N - New - Entering into New Categories, New Products, New grographies or creating New Markets - all boost growth in EPS (earnings) and expansion in PE multiple
G - Great - Great, expert, clean, and trustworthy management, Great Culture, Great Brands
Ideally, LASTING companies at good prices should be the key to long term investment heaven.
Please give me your feedback as I try to fine-tune my model.
Are there any parameters you would want me to include? Are there any parameters you think should not be in this model? What has been your experience in searching for holy grail?
Please note that this is for my own education, and not for giving investment advice to anyone.
Moderators, this is the first topic I am creating here. If it is misplaced/against community rules, please let me know and I will move it around/delete it.