BC STOCK SELECTION PROCESS
Saved by @naveenksyal

How to select stocks for your long term portfolio :

A Thread 🧵⤵️

(i) Selecting the sectors
(ii) Selecting the companies
(iii) How to review and decide
(iv) Perfect time to exit/pyramiding

Do Like and Share to help us educate maximum investors.

(1/n)

 (i) Selecting the sectors :

• Sectors which are unaffected due to any slowdown or in other words, non-cyclical sectors should be preferred.

• Which are having good demand of their products / tailwinds in their favour. IT/Pharma is the recent example.

(2/n)
• Govt. policies in favour of the sector by imposing any duties or providing incentives to the industry.

• Always check for proxy plays, Example :

- Realty boom - Building materials, Appliances, Cement (Proxy)

• Sector which is the need of the hour - Renewables.

(3/n)
(ii) Selecting the companies :

• 2 ways to select the companies :

- Based on past financials / historical data
- Estimating forward valuations

• By analysing past data, you can identify the company which performed the best, can be classified as the leader.

(4/n)
• Companies with consistent higher OPM, RoCE, RoE and OCF conversion are considered good for investing.

• For example, leaders in various sectors :

- Diagnostic - Dr Lal Pathlabs
- Amines - Alkyl Amines
- Cement - Shree Cement

(5/n)
• While analysing past data, we can use this formula :

- Sales Growth (5 years) > 15%
- RoCE > 15% or RoE > 12%
- Net Debt/Equity < 0.1

(6/n)
• Estimating forward valuations : This is a very tricky part of selecting the stocks.

• Based on recent quarterly earnings and management's guidance, you will have to project the future earnings.

• In this case, sectorial tailwinds must be in favour of the company.

(7/n)
• While forecasting the valuations, please keep a note on :

- OPM in improving trend (last few quarters)
- Avoid capital intensive sectors (such as metal)
- Management guidance and their execution
- Sectorial tailwinds in favour

(8/n)
(iii) How to review and decide :

• Check the quarterly earnings and attend con-calls.

• Review their Half-Yearly and Yearly results where company posts balance sheet along with CFO statement.

• Compare the guidance given with what they delivered.

(9/n)
• While checking B/S or CFO statement, Do check :

- Trade Receivables - Significant increase - Negative
- Cash + Investment Value - Increase - Positive
- OCF conversion from EBITDA - High - Positive
- Working capital cycle & management

(10/n)
- Higher CWIP - Capex - Positive in longer run
- Contingent liabilities - High - Negative
- Net fixed asset turnover (NFAT)
- RoIC and RoCE.

• Invest in the businesses which can generate higher RoCE and OCF from their businesses.

(11/n)
(iv) Perfect time to exit / pyramiding :

"Always remember : When everyone is greedy, be fearful and when everyone is fearful, be greedy."

Track the business, valuation metrics & decide.

I hope this thread will add some value to your analysis.

Thanks for reading😊

(12/12)

You May Also Like

ArmaniTalks \U0001f399\U0001f525
ArmaniTalks 🎙🔥...
@ArmaniTalks
Make them irrelevant > Hold a grudge

Holding a grudge is the easy thing to do.

But holding a grudge is not the right thing to do.

A grudge puts poison in your body & rewires your subconscious mind.

You consume the poison & destroy your reality while your attacker sleeps like a baby.
LIFE
ArmaniTalks \U0001f399\U0001f525
ArmaniTalks 🎙🔥...
@ArmaniTalks
Shy people are either overthinking or highly observant of the social setting.

And in many cases it can be both.

'So what do I do?'

You learn the 75/25 law.

'What is that?'

The law of charisma...👇

Let's address the over thinkers first.

Do you have any idea why you overthink?

'Yea. Because others are judging how shy I am.'

Incorrect.

Others are thinking about themselves, not you.

But the fact that you think they are thinking about you, you fuck up the interaction.

Now you stay in your head too much & avoid the present moment.

A major no no in the social world.

Your tendency to think that others are judging you for being shy, coincidentally makes you more shy.

And that's when you start giving off a strange vibration to the social setting.

This is when you begin attracting comments like 'why are you so quiet?'
LIFE
Advertisement
Rudy Havenstein, listening to Nas all day.
Rudy Havenstein, liste...
@RudyHavenstein
I hate when I learn something new (to me) & stunning about the Jeff Epstein network (h/t MoodyKnowsNada.)

Where to begin?

So our new Secretary of State Anthony Blinken's stepfather, Samuel Pisar, was "longtime lawyer and confidant of...Robert Maxwell," Ghislaine Maxwell's Dad.


"Pisar was one of the last people to speak to Maxwell, by phone, probably an hour before the chairman of Mirror Group Newspapers fell off his luxury yacht the Lady Ghislaine on 5 November, 1991." https://t.co/DAEgchNyTP


OK, so that's just a coincidence. Moving on, Anthony Blinken "attended the prestigious Dalton School in New York City"...wait, what? https://t.co/DnE6AvHmJg

Dalton School...Dalton School...rings a

Oh that's right.

The dad of the U.S. Attorney General under both George W. Bush & Donald Trump, William Barr, was headmaster of the Dalton School.

Donald Barr was also quite a


I'm not going to even mention that Blinken's stepdad Sam Pisar's name was in Epstein's "black book."

Lots of names in that book. I mean, for example, Cuomo, Trump, Clinton, Prince Andrew, Bill Cosby, Woody Allen - all in that book, and their reputations are spotless.
EPSTEIN NETWORK
Patrick Chovanec
Patrick Chovanec
@prchovanec
I'm going to do two history threads on Ethiopia, one on its ancient history, one on its modern story (1800 to today). 🇪🇹

I'll begin with the ancient history ... and it goes way back. Because modern humans - and before that, the ancestors of humans - almost certainly originated in Ethiopia. 🇪🇹 (sub-thread):


The first likely historical reference to Ethiopia is ancient Egyptian records of trade expeditions to the "Land of Punt" in search of gold, ebony, ivory, incense, and wild animals, starting in c 2500 BC 🇪🇹


Ethiopians themselves believe that the Queen of Sheba, who visited Israel's King Solomon in the Bible (c 950 BC), came from Ethiopia (not Yemen, as others believe). Here she is meeting Solomon in a stain-glassed window in Addis Ababa's Holy Trinity Church. 🇪🇹


References to the Queen of Sheba are everywhere in Ethiopia. The national airline's frequent flier miles are even called "ShebaMiles". 🇪🇹
CULTURE
Nodutdol | \ub178\ub463\ub3cc
Nodutdol | 노둣돌...
@nodutdol
Today is “Korean American Day”.

#OTD in 1903, the first large group of Korean immigrants arrived in US-conquered territory. [Thread]


102 Korean men, women, and children arrived in Honolulu aboard the SS Gaelic to work in Hawaii’s sugar plantations. By 1905, Koreans comprised 11% of Hawaii’s plantation workforce—around 7000 people.


This first wave of Korean immigrants arrived amid sharpening imperialist rivalry in the Pacific. Korea had slowly been losing its independence for decades, and by 1903 was just two years away from becoming a protectorate of Japan.

At the same time, the US was consolidating its position in the Pacific, annexing Hawaii, Guam, and the Philippines in 1898, and partitioning Samoa in 1899.

(Pictured: US troops in the Philippines)


US missionaries colluded with the Hawaiian Sugar Planters Association to secure a new, cheap labor force for Hawaii’s sugar fields. Many of the Koreans who arrived in Hawaii from 1903-1905 were Methodists.
WORLD