Goal: CAGR of 30%
Stock identifying rules:
1. ROE for past 3 years > 25%,ROE for past 5 years > 20%,ROCE for past 3 years > 30%, ROIC > 30%,ROA for past 3 years > 20%,ROA for past 5 years > 20%& Current Ratio > 1.5 & Profit growth for past 3 years & 5 years > 20%
2. Management Quality
3. Debt to Equity < 0.3
4. Does it have the moat?
5. Promoter holding > 50%
6. P/E should be less than 40
Note: 100% compliance not needed.
Above are based on the ideas that I got from the books of Peter Lynch, Pat Dorsey etc and also based on my readings on this forum.
Capital Allocation rules:
1. Total # of stocks should not be more than 8 (Trying to take a median path between super concentrated and diversified)
2. For a single stock, maximum allocation is 30% and minimum allocation 5%
3. Approach Pharma as a basket of stocks instead of picking a single stock due to FDA approval/inspection risks.
Allocation:
Sl. No |
Company | Allocation |
---|---|---|
1 |
Pharma | 30% (Shilpa Medicare 15%, Suven Life Sciences 7.5%, Ajanta Pharma 7.5%) |
2 | Kitex Garments | 20% |
3 | Repco Home Finance | 20% |
4 | Kaveri Seed Company | 15% |
5 | Mayur Uniquoters | 5% |
6 |
Amararaja Batteries | 5% |
7 | Atul Auto | 5% |
Other stocks that I'm tracking currently are Accelaya Kale, Bayer Cropscience, Adi Finechem, Vakrangee, RS Software & V-Mart
Also waiting for compounders like Page Industries, Eicher Motors, Blue Dart etc to correct to a reasonable valuation. Looks like this will never happen :)
Request forum members to provide your feedback.