How to pick stocks the right stocks?

[yara]

It is very easy iwinux if you have not bought a single share yet,close your eye and buy ANYTHING and I bet you will make money in your FIRST trade but if you are an oldtimer and do the same thing mentioned above,I bet you will lose your money!!Just try with small qty and post the results!Why this happens I shall let you know after your reply.

 

[CreditViolet]

It is very easy iwinux if you have not bought a single share yet,close your eye and buy ANYTHING and I bet you will make money in your FIRST trade but if you are an oldtimer and do the same thing mentioned above,I bet you will lose your money!!Just try with small qty and post the results!Why this happens I shall let you know after your reply.

Its never about a single trade or the first trade.Its about having a strategy with a positive expectancy and executing it in a risk efficient manner to come out ahead in the long run.


CV

 

[Agilent]

STUDY...EPS growth rate & forward p/e
NOT..P/E growth rate and forward eps...


oilman5

Very aptly said

That is the core of FA

AGILENT

 

[kkseal]

Hi
I was wondering how does one go about picking the right stocks?
One is technically and the other one is fundamentally.
Technically its quite easy, seeing the graph, what about fundamentally?
Is there some kind of scanner? And what are the things it scans for? PE...

Can anyone enlighten me???

You can scan for the following :-

P/E {L}
P/BookValue {L}
Sales/MCap {L}
EV/EBIDTA {L}
ROCE {H}
RONW {H}
ROE {H}
Debt/Equity {L}
CAGR grwth in EARNING {H}
CAGR grwth in REVENUE {H}
EBIDTA or OP Margin {H}

H = High values better, L = Low values better

Some of these (but not all) can be obtained through the ICICIDirect scanner.

There are also certain ways of interpreting the above, like P/E s (& also ROCE, RONW, ROE, OPM) should be viewed in the context of a sector (i.e. relative to the avg sectoral PE) and must not be viewed in isolation (a low PE is not necessarily a good thing).

The ultimate trick is to arrive at a fair estimate of the forward earnings. But this needs to be calculated. There's also a ratio called PEG which gives you an estimate of this - but not available for most Indian stocks.

I'd like to add that FA is not just about a bunch of ratios; rather take a holistic view and look for good growth stories for the next 2-3 yrs.

Regards.
Kalyan.

 

[karthikmarar]

I'd like to add that FA is not just about a bunch of ratios; rather take a holistic view and look for good growth stories for the next 2-3 yrs.
.

I fully agree with you Kalyan, FA is not just a bunch of ratios. In addition to looking at the fundamentals of individual companies one has to look at teh strength and future outlook of the sectors they are in and the interplay between the sectors. Like the effect of falling crude price on the sugar sector... one may ask how.... through the Ethanol connection ...

regards

Karthik