Here’s a systematic breakdown of your stock selection and investment strategy with bullet points and real-life examples for better understanding:
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### **1. Avoid News Chasing, Use Technical Screeners**
- **Why?** News-driven volatility is unpredictable.
- **How?** Use tools like **Chartink’s screener** for breakout/pocket pivot signals.
- **Example:**
- Instead of buying **Zomato** based on IPO hype (news-driven), wait for a technical breakout (e.g., crossing 200-day MA with volume).
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### **2. Study Promising Sectors via Mutual Fund Portfolios**
- **Why?** MFs research deeply before investing.
- **How?** Check top holdings of consistent-performing funds.
- **Example:**
- **ICICI Pru Bluechip Fund** heavily invested in **HDFC Bank, Reliance** – signaling strong sectors.
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### **3. Peer Group Analysis (Low P/E, High ROE, Improving EPS)**
- **Formula:** ROE / P/E > 2 (e.g., 15% ROE / 7 P/E = 2.14 → Good).
- **Example:**
- **Tata Elxsi (ROE: 30%, P/E: 50) vs KPIT Tech (ROE: 25%, P/E: 40)** – KPIT may be better valued.
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### **4. Focus on Cyclical & Recently Corrected Strong Sectors**
- **Why?** Cyclicals rebound (e.g., autos, chemicals).
- **Example:**
- **Tata Motors** corrected in 2020 (COVID) but rebounded strongly in 2021-22.
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### **5. Big Revenue + Profitable Companies**
- **Example:**
- **Asian Paints** – Consistently high revenue growth (>10%) + strong margins (~20%).
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### **6. Monopoly Businesses with Growing EPS**
- **Example:**
- **IRCTC** (monopoly in rail tickets) – EPS grew from **₹4 (2019) to ₹20 (2023).**
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### **7. Avoid Noise & Popular Stocks**
- **Example:**
- **Paytm (2021 IPO hype)** crashed, while boring **Page Industries (Jockey)** delivered steady returns.
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### **8. Strong Smallcaps with Low Institutional Holding**
- **Why?** Less selling pressure in downturns.
- **Example:**
- **Elecon Engineering** (low FII holding) outperformed during 2022-23 market fall.
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### **9. Test Portfolio + Volume Scaling**
- **How?** Track 10-15 stocks, add more to stable performers.
- **Example:**
- If **Polycab** holds steady while others dip, increase allocation.
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### **10. Daily Shortlisting + Breakout Entry**
- **How?** Pick 3 diversified stocks daily, buy only on breakout.
- **Example:**
- **Bajaj Finance** breakout above ₹7,000 (2023) signaled a strong uptrend.
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### **11. Valuation Check (EPS/Bond Yield)**
- **Formula:** TTM EPS / 0.07 (7% bond yield).
- **Example:**
- **Infosys EPS: ₹60** → Fair value = 60/0.07 = ₹857 (compare to market price).
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### **12. Warren Buffett’s 6 Stock Categories**
- **Fast Grower:** **Tesla (2020-2021)**
- **Stalwart:** **HUL**
- **Turnaround:** **Tata Steel (post-2016 recovery)**
- **Asset Play:** **ITC (hidden land value)**
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### **13. Avoid Over-Diversification & Debt-Heavy Firms**
- **Example:**
- **Yes Bank (high debt)** collapsed, while **Kotak Bank (low debt)** thrived.
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### **14. Boring Businesses Outperform**
- **Example:**
- **Astral Pipes (plumbing)** gave 10x returns in 10 years vs. flashy **Suzlon (volatile).**
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### **15. Buybacks & Dividends = Positive Signals**
- **Example:**
- **TCS** consistently buys back shares + pays dividends.
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### **16. Avoid Hype & Commodity Stocks**
- **Example:**
- **Vodafone Idea (hype stock)** failed vs. **Bharti Airtel (steady performer).**
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### **Key Takeaways:**
1. **Screen technically**, not emotionally.
2. **Peer comparison** > Blind investing.
3. **Monopolies & boring stocks** often win long-term.
4. **Debt-free, low-FII smallcaps** can be multibaggers.
5. **Ignore noise** – focus on fundamentals + breakouts.
Would you like a sample screener checklist or backtested examples?
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