What you read in the following paragraphs articulates my experience of Accountancy, Audit, and a Value equity investor.
If you always thought finding that right company to invest in can only be done by reading newspapers, or listening to financial news channels, or dwindling through equity forums then that’s like dating the 1st girl or boy you come around. We don’t do that, do we?
Investing is simple but not easy.
Remember when you wanted that candy in your childhood and your mother asked you to get only 1 and damn you had a daunting task to choose and decide for 1 candy in that entire shop. But you were good at that then, then why can’t you be good at finding your dream money multiplier? Believe me if I can then even you can, let me help you through that :)
Anything that comes easy isn’t rewarding. Fight your dopamine and grind a little to be the magician your bank account dearly wants.
- Shall we start with some books? Yes?
Be the seasoned investor and complete the free Equity investments course at Varsity. Complete the below 3 modules and Voila you have mastered everything Theoretical that you will ever need.
(i) Introduction to Stock Markets — Only if you are strictly Novice
(ii) Fundamental Analysis — Must if you faulter at fundamental analysis
(iii) Technical Analysis
You can skip over the Technical patterns if you wish to, I have better ways to trade coming ahead 😉 - Don’t like reading books? Umm..tough choice
Alright, I’ll try and breakdown the key learning points for you in the articles that follow. - At this point I presume you know enough about how to read through a Financial statement. I promise that is all you need to start. Now let’s move on to filter the best stock for you.
- Open Screener and click on Screens on the Top left.
- Click on Create New Screen
- It will ask you to type in your Query; Copy and paste the following-:(OPM latest quarter > OPM preceding quarter OR
Operating profit latest quarter > Operating profit preceding quarter) AND
(OPM latest quarter > OPM preceding year quarter OR
Operating profit latest quarter > Operating profit preceding year quarter ) AND
Market Capitalization > 1000 AND
Market Capitalization < 10000 AND
Promoter holding > 50% AND
Debt to equity < 1 - Now you have a list of stocks that are growing their margins and profits not only quarterly but also annually.
So let me ask you, if you had to lend money to one of your two friends — one with a stable job and the other less committed to working, often in debt — wouldn’t you feel more confident lending to the one with a stable job (friend 1)?
That’s what our Query has filtered out for us 😉 - To be honest, if you pick almost any stock from this list it will make you money, but you won’t do that, you’re a magician in training to transform your wallet into a bank, right?
So We’ll go a step further and try and find stocks that are trading below their median PE and are consolidating. - Stocks blow Median PE?
Search for any stock on Screener and go to Chart and then click on PE.
Here the Greyed out dotted line is Median PE and the Blue Line graph is your PE. (Image Below) - Consolidating? It’s nothing but rightward movement of stock price. Say 2 years ago a stock was at a price of 100 and it still hasn’t moved much and is trading around the price of 110. A daily chart of the stock would look like a straight line moving rightwards. (The 2 year period is hypothetical)(Image Below)
- Now this will leave you with a list of stocks that are posting great earnings, are not exposed to much debt, are consolidating on daily chart and are trading below their usual valuation — Undervalued.
- Now you may choose anyone stock of this list and track it regularly and buy that dream Red shimmering Ferrari (Refurbished) you always dreamt of.
But if you wanna buy the Subtly new Ferrari and be the best magician then umm you are up for a bigger game. Salud! - Off the above list you will find the stocks that fall under the sunrise industry, such as — Renewable energy, EV, Railways, Water recycling, waste recycling, etc.
You read their management analysis and discussions, you read the transcripts, you read the quarterly earnings report and keep tracking the business just the way you track your crush’s Insta profile 👀
Well, that’s about it.
Reading and doing it for the 1st time might seem difficult but believe me if you do this over and over again for just 1 quarter you’ll know all the best stocks in the market. This is the best way to get started.
Investing is Magical, experience it to realise it 😉
Read, Find, Analyse, and Invest 💸
OM!
