My SCREENING TECHNIQUE Based #hypothetical #Portfolio
6th Upd - 26Sep2021

📍Purely based on my Financial Data Screening !

NO TIPS!
NO MEDIA!

📌#Screener Names in👇🧵summarizes Fundamental, Momentum, Valuation traits hence saves tons of analysis time.

@Vivek_Investor

1

DrVijayMalik_ValueGuru_Checklist
Ist Upd - 05Jul2020

#Thread

A small tribute to @drvijaymalik on the occasion of Guru Purnima🙏

#valueinvesting #stocks
#SalesGrowth #OPM #npm
#CurrentRatio #DebtToEquity
#SSGR #MarginOfSafety #MaxPEtoPay #EarningsYield
#FII
#MaithanAlloy

1n

The Final Checklist for Buying Stocks !

Financial Checklist !

Taking Maithan Alloys as Sample Stock !

Tax Payout Shown in 1n (above).

2n

Valuation Checklist !

Earnings Yield > 10Yr G-Sec Yield. Higher the difference better it is.

Max PE to Pay calculated on the basis of Prevailing Current Interest Rate in the Economy (10Yr G-Sec Yield)

3n

Business & Industry Checklist !

10yr Cumulative PAT vs CFO. Ideally both should be similar or CFO may be little higher (Maithan Alloy Example)

Creation of Value for shareholders -
10Yr Increase in Market Cap > 10yr Increase in Retained Earnings (Maithan Alloy Example)

4n

Management Checklist & Other Business Parameters !

Most of this needs to be done manually. Take it as homework🙂

Maithan Alloy FII (1.87%) & Promoter Shareholding(74.99%).

Less FII better it is.

Check Change in Promoter Holding in last 3yrs (insider Buying) in 1n (above)

5n

@unseenvalue #Screened few businesses trading at single digit MCap/CFO.

I made a mistake in above list.
Apologies ! It is accidental discovery of businesses trading at single digit MCap / Cash End of Last Year.

🌟Here is businesses #screened for MCap/CFO.

Q&A 161

Read this 🧵to understand ROE, PE & relationship between them.👇

PE expansion to bridge the Gap (if any) between ROE & PE.

RT if you find this helpful.

1

ROE is PE's brother from another mother / Half-brother (Sautela Bhai)

@Atulsingh_asan

2

ROE & PE definition continued..

Keep an eye on Equations !

3

Establishing Relationship between ROE (profitability) & PE (valuation).

Replace Market Capitalization with Book value in Earnings Yield (or PE) we get ROE.

4

Understanding ROE & PE deeper with Dupont Analysis.

5

#RSI is a common indicator which most of us use in the stock market.

This learning thread would be on
"𝙐𝙨𝙚𝙨 𝙤𝙛 𝙍𝙎𝙄"

Like👍 & Retweet🔄 for wider reach and for more such learning thread in the future.

Also, an investment strategy is shared using RSI in the end.

1/16

Setup 1:

RSI- commonly used to show whether price is overbought or oversold.

General rule:
𝐑𝐒𝐈 > 𝟕𝟎 -- 𝐎𝐯𝐞𝐫𝐛𝐨𝐮𝐠𝐡𝐭
𝐑𝐒𝐈 < 𝟑𝟎 -- 𝐎𝐯𝐞𝐫𝐬𝐨𝐥𝐝

One becomes cautious once price becomes overbought and optimistic when price becomes oversold.

2/16

Let's understand this with an example of Laurus Labs:

1. It was in overbought zone and after a few days when a small dip was seen from 693 to 588 (15% downside)

2. It was in oversold zone and after a few days when a small rally was seen from 59 to 107 (82% upside)

3/16

Well, this looks very easy, but it is not.

When a price is in overbought zone and is in momentum, then it can move up without taking a dip and exiting or shorting stock would prove wrong.

When IRCTC was in overbought zone, price went up from 2718 to 6396 (135% rally).

4/16

Similarly, for oversold stock.

When a price is in oversold zone and is crashing, then it can move down without taking an upmove and buying stock would prove wrong.

When DHFL was in oversold zone, price went down from 126 to 11 (91% crash).

5/16

This is in response to the question by @unseenvalue

If I had to buy 1 stock today, anywhere in the world, no avg. up or down, 5 year holding period (I will make that as 10 year for thesis to play out)

Since I track mainly Indian equities, restricting the choice to this space

Few points to look for
1. Strong macro tailwind rather than headwind, huge growth runway for company/segment. It can't be in a niche space & demand must not be easily substitutable
2. Strong Biz Model, high growth curve (15%+ over the period), strong ROE profile (hurdle rate 20%)

3. Low or no leverage, efficient capital allocation, (read minimal or zero fresh dilution requirements), strong cash flows and correspondingly high dividend payout ratios (consistent dividend history) and finally strong moat and with limited regulatory involvement / no reg issues

4. Promoter quality and intention must be beyond reproach, proven management with skin in the game
5. Capability to manage disruption, and if possible to even profit from it. If you can't be disrupted easily, you will eventually adapt your game to gain scale

6. There must be a possibility of non-linear growth if the scale-up hypothesis gets proven right. It's like an FD with low fixed return plus significant upside optionality. Multiple revenue streams / margin levers / IP that can provide non linearity in growth

The biggest winners have great earnings on the table right near the start of their massive mega move.

Look for Eps growth and acceleration stocks

Your big winners of the next bull market will most likely be from this list

Proven methods followed by achievers like WON , DR