Easy 3 Step Guide to Select Fundamental Stocks

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Want to select stock for investment? And also fundamental sound?

Here is some interesting points with complete details.

    • All you need is list of stocks which you find interesting or worth to invest then visit www.BSEINDIA.com.
      (for Indian stock markets only)
      In the search box type the name of the stock and fetch results.

     

    • Under option called Financial, see results Annual as well as quarterly reports.

     

    • Start from Revenues,
      if it’s increasing every quarter as well as annual or it’s stable but not negative then it’s a good stock.

     

    • Second Net Profit ,
      if its increasing every quarter as well as annually then it’s a good stock

     

    • Third see Debt & Reserve Capital :-
      Debt:-
      Suppose the Debt of a company was

      100 crores in 2014,
      90 crores in 2015,
      70 crores in 2016,
      50 crores in 2017. Reserve Capital:-
      RC in 2013 was 210 crores in 2014, 218 crores in 2015, 226 crores in 2016, 240 crores in 2017

     

    • Here u r seeing the Debts of this company is decreasing every financial year and the Reserve Capital is increasing every financial year. So, it’s a safe company to invest in. If a Company has zero debt but has good Reserve capital then it’s a Golden stock to invest

     

    • Next is Shareholding Pattern,
      Just see the percentage of stock promoter’s r holding & public is holding.
      Example: – Suppose in
      2014 Promoters Holding 66% and Public or Institutions=34%,
      2015 Promoters Holding 70% and public or institutions=30%,
      2016 Promoters holding 72% and public or institutions=28%,
      2017 Promoters holding 75% and public or institutions=25%.

      So we may consider it less risky stock because Promoters holding has increased every year and not decreased so they have faith in their company and If FIIs holding also increases every quarter or annually then additional good point for stock

     

    • Next is P/E ratio and Industry P/E ratio
      suppose it’s a Pharma stock trading at 200 rupees and its P/E ratio is just 9 and Its Industry P/E ratio is 27.

      What does it means? It means that the stock has the potential to triple from here because its Industry P/E ratio is thrice its own P/E ratio

     

    • Next to check Promoters pledged shares.
      Suppose company is posting very good results every year but most of its shares are pledged by promoters then you can avoid that stock.

     

    • Next is Book Value.
      Book Value is Total Assets of a company Divided by its total numbers of shares. Suppose its Book value 85 and the share is already trading at 450. For me it’s already an overvalued stock because its trading way above its book value even though it’s a good company risk element is high for investment. Now, suppose the Book Value of a stock 300 and its currently trading at 75. It’s a good pick or safe pick for investment because its Book Value is still 4 times its current price. But u have to check other above mentioned factors also to invest in it. Only if its Book Value is high than its current price doesn’t mean that stock is good

     

    • Another way is to select turnaround story stocks. Suppose a company was posting losses every financial year, but suddenly this year it has posted profit. So the stock is ready for turnaround now

     

    • Suppose, the company had huge debts but every quarter its decreasing its debt, it’s also a turnaround candidate

     

    • Now how to find Multibaggers. I know everyone wants to know this :-
      Yes, just see the All-time data’s of a stock suppose A stock was just 8 Rupees in 2006 and went to 250 in 2009 but started coming down again and came to 48 and now again in 2017 it crossed 250 and closed above 250 twice. It’s a multi-year breakout in that stock now and it’s a multi bagger now just keep a tight stop loss 210 to 220 and keep buying it till it reaches 500 at least that’s our 1st target now. Now at 500 again review the fundamentals mentioned above if everything is fine then stay invested for further up moves or if fundamentals not supporting then simply just book your profits around 500.

     

    • *Disclosure:-
      Report shared here is only for education purpose only. Trade and invest at your risk.
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