This is my first post here and i’m quite excited to start a good debate on a long standing question .
“How do i narrow down on companies that seem valuable”
What im looking to get out of this discussion is to understand the various tools others may use to find out stocks that are good to invest in for a long term period.
So far i’ve been investing in stocks from the past 3 years and i do have some idea of how a business should look before it become appealing to me however the problem that i’m always facing is to find out more gems available in the 1000s of stocks present in the BSE.
I dont use any specific tools , neither am i aware of any.
If anyone is using certain tools to at least drill down into potential companies, i would like to know of them if possible.
I hope this post isn’t inappropriate
I hold the following from the past 3 years.
T V S MOTOR COM
U FLEX LIMITED
TATA MOTORS LTD
ASAHI SONGWON C
I think you are looking for screening tools. In that case probably your stock holding names will not be relevant for this post. Or else you have to provide rationale behind these purchases. SEBI is tightening the noose.
Your screening tool depends on investment method you use. I can share with you what I do:
I build seven blocks these days to an investment decision.
- Competitive advantage
- Good quality of management
- Margin of safety- based on valuations
- Robust risk management- based on financials
- Special situations
- Future catalysts
- Follow the crowd
I use any of the blocks for a screening and then start building other blocks.
For example say I want to start from competitive advantage, I pick up names from published magazines, internet sources where other analysts touting new fads or competitive advantage.
Or Margin of safety- look for market prices appears to be discounted to business valuation basis price to book etc.
Or follow the crowd- if a stock is flying high I picked them up to know further what happened.
I can tell you some general pitfalls and issues I have faced in the past.
- Don’t attach too many variables while screening. Say 12/13 parameters at one go. If one tick goes bust you will miss a bunch of them.
- Using different aspect as matrix. I would go for tracking one category of screening before moving to second. Like I explained above, screen on valuation and then screen on management. Problem is a special situation may not good financials, if you club them together it wont show true picture.
- Avoid frequent screening, I do once in quarter in line with published financials. Actually annual numbers are more detailed.
In my take no single screening tool will help you. If you are looking for a financial or valuation screening then I find these useful:
But a caution- these tools pull data, classification and re-classification is done by management. No tool owner have the capacity to do these segregation’s, and some time management discretion can be highly erratic.
Thanks for your response and yes i am using screener.in and after playing around with it, i figured its quite detailed .
On another note, i put up my holding as a disclaimer that’s all.
Thanks for your suggestion.
Hello, looks like you have really good growth stocks…how did you manage to figure them without using any screener/tool?