Important Gyan for Pure Investors not traders

How, to select a stock for Investment
or u can say How to check fundamentals of a stock

First Go to www.BSEINDIA.com In the search box type the name of the stock which you are interested in investing:-

Now select Financial, see its results Annual as well as quarterly

Firstly see Revenue, if it’s increasing every quarter as well as annual or it is stable but not negative then it’s a good stock

Then see its Net Profit, if it’s increasing every quarter as well as annually then it is a good stock

Then see its Debt as well as Reserve Capital:-

Suppose the Debt of a company was 100 crores in 2014, 90 crores in 2015, 70 crores in 2016, 50 crores in 2017

And its Reserve Capital in 2013 was 210 crores in 2014, 218 crores in 2015, 226 crores in 2016, 240 crores in 2017

Here you are 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 is a Golden stock to invest

Now see Shareholding Pattern of that stock. Just see the percentage of stock promoters r holding & public is holding.

For example:- Suppose in 2014 Promoter Holding 66% Public or Institutions holding rest 34%, 2015 Prom Holding 70% and Public and inst=30%, In 2016, Promoters holding 72% and public and inst=28%, and in 2017 Promoters holding is 75% and public and inst=25%. So its a very 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

Now see its P/E ratio and also check its Industry P/E ratio

Suppose its 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 mean? 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 point is to check if Promoters have pledged its shares. Suppose company is posting very good results every year but most of its shares are pledged by promoters then simply avoid that stock

Now, next see its Book Value. Book Value is Total Assets of a company Divided by its total no of shares. Suppose its Book value 85 and the share is already trading at 450. For me, it’s already a overvalued stock because of its trading way above its book value even though its a good company risk element is high for investment. Now, Suppose the BV of a stock 300 and it is currently trading at 75. It is a good pick or safe pick for investment because its BV is still 4 times its current price. But u have to check other above-mentioned factors also to invest in it. Only if its BV 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 a profit. So the stock is ready for turnaround now

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

Now how to find Multi baggers. I know everyone wants to know this:-

Yes, just see the All-time data 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 its 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 ur profits around 500.

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