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How do I pick quality stocks?
//5 THREAD //
//5 THREAD //
1. S E C T O R
-If the industry is cool and has room to grow,I really get attracted to it.
-Industry should be evergreen.
That means-
People will keep consuming the Products of such industry even though the economy collapses
- Avoid Hot Sector . Do not follow the trend.
-If the industry is cool and has room to grow,I really get attracted to it.
-Industry should be evergreen.
That means-
People will keep consuming the Products of such industry even though the economy collapses
- Avoid Hot Sector . Do not follow the trend.
2. BUSINESS MODEL
- the Business must be easy to understand
-Follow your Circle of competence method
- It should not be an acquisition machine
-Read Annual Reports-specially
Management and discussion
Section
- the Business must be easy to understand
-Follow your Circle of competence method
- It should not be an acquisition machine
-Read Annual Reports-specially
Management and discussion
Section
3. M A N A G E M E N T
•Things to know---
~No pledged Shares
~If Auditor left=Red flag
~No frequent change of board of directors
~High holdings of the promoters
~CSR activity
~Dividend issue
~Salary/profit=10%<Red
~Sharebuyback=Good sign
~1-2>share dilution
~Admit mistakes
•Things to know---
~No pledged Shares
~If Auditor left=Red flag
~No frequent change of board of directors
~High holdings of the promoters
~CSR activity
~Dividend issue
~Salary/profit=10%<Red
~Sharebuyback=Good sign
~1-2>share dilution
~Admit mistakes
4. P R O F I T A B I L I T Y 10 years
-Gross margin <50%
-Operating profit <27%
-Operating/Interest >10%
-Profit Margin <15%
-Operating Cashflow/profit<85%
-ROE <20%
-ROCE <25%
-Debt-Equity >1
-Inventory turn over Ratio <4
-Asset turn over Ratio <1
-current ratio <1
(More)
-Gross margin <50%
-Operating profit <27%
-Operating/Interest >10%
-Profit Margin <15%
-Operating Cashflow/profit<85%
-ROE <20%
-ROCE <25%
-Debt-Equity >1
-Inventory turn over Ratio <4
-Asset turn over Ratio <1
-current ratio <1
(More)
-Quick ratio <1
-Return on Asset Ratio <10
-Financial leverage >2.1
-Free cashflow/EV=5.94%
-Interest coverage <50
-Constant EPS Growth
-Debtor days >35-45
-Cash conversion cycle >37
-Return on Asset Ratio <10
-Financial leverage >2.1
-Free cashflow/EV=5.94%
-Interest coverage <50
-Constant EPS Growth
-Debtor days >35-45
-Cash conversion cycle >37
5. V A L U A T I O N
-P/S >1.5
-P/B >5 (based on ROE)
-EV /EBITDA >15
-DCF Method
-PEG Ratio >1.5
-Historical PE
•There are so many metrics to test any stocks that I haven't covered
~It is not possible here
~If this thread seems helpful to you,Kindly retweet my first tweet
-P/S >1.5
-P/B >5 (based on ROE)
-EV /EBITDA >15
-DCF Method
-PEG Ratio >1.5
-Historical PE
•There are so many metrics to test any stocks that I haven't covered
~It is not possible here
~If this thread seems helpful to you,Kindly retweet my first tweet
For more information,you can follow them up
// Quality investors //
@10YearTarget
@MindsetPi
@HeroDividend
@DecadeInvestor
@Dividend_Dollar
@TD_Investor
@finance_hipster
@TheAlphaThought
@PatrickMcLaughn
@king_dividend
@DivCultivator
@itsKostasOnFIRE
#Stocks
// Quality investors //
@10YearTarget
@MindsetPi
@HeroDividend
@DecadeInvestor
@Dividend_Dollar
@TD_Investor
@finance_hipster
@TheAlphaThought
@PatrickMcLaughn
@king_dividend
@DivCultivator
@itsKostasOnFIRE
#Stocks
If you like my thread,please Retweet my first tweet. https://twitter.com/MindsetPi/status/1376188826008231939?s=19
https://twitter.com/MindsetPi/status/1376188826008231939?s=19
