Everyone will tell you this during Market Crash 👀
•Don’t Panic
•Have Patience
•Avoid Hurry Selling
•Buy the dip
•Rebalance when the worst is over
•Always have a backup plan
•...etc...etc...etc
But only a few share some practicals. Let's do it today.
A thread🧵
•Don’t Panic
•Have Patience
•Avoid Hurry Selling
•Buy the dip
•Rebalance when the worst is over
•Always have a backup plan
•...etc...etc...etc
But only a few share some practicals. Let's do it today.
A thread🧵
It is next to impossible to predict a fall. But when it happens we are left with two options:
❌To panic sell good stocks.
✔️Stay calm and look at the crash as an opportunity to invest in more quality stocks.
❌To panic sell good stocks.
✔️Stay calm and look at the crash as an opportunity to invest in more quality stocks.
Now you would ask that everything is in RED. How to differentiate quality stocks from fundamentally weak stocks?
We have an answer.
Let's look at 5 important ways to identify quality stocks.⤵️
We have an answer.
Let's look at 5 important ways to identify quality stocks.⤵️
1. Promoter Holding
It is the % of shares that are held by the promoters of the company. A promoter is one who sets up the business or the company. He is like the parent of the company.
It is the % of shares that are held by the promoters of the company. A promoter is one who sets up the business or the company. He is like the parent of the company.
What should you do?
✅Look for companies with a high level of promoter holding or where promoters have increased their stake in the recent quarters.
⚠Check for Pledging %.
✅Less than < 30% is considerable.
✅Look for companies with a high level of promoter holding or where promoters have increased their stake in the recent quarters.
⚠Check for Pledging %.
✅Less than < 30% is considerable.
https://twitter.com/finologyticker/status/1483064864927264770?s=20&t=ksadqzMB1KoCuvm6fGCsBQ
2. Debt
It is a fixed obligation or loan the company has to pay irrespective of the market situation. Companies take debt for a variety of reasons & have to pay interest on that debt.
It is a fixed obligation or loan the company has to pay irrespective of the market situation. Companies take debt for a variety of reasons & have to pay interest on that debt.
What should you do?
✅Check the levels of debt & ability of the company to meet its obligations.
⚠Avoid companies with high levels of debt.
➡Check Debt to Equity Ratio & Interest Coverage Ratio.
✅Debt to equity < 2 & Interest Coverage > 2 is considerable.
✅Check the levels of debt & ability of the company to meet its obligations.
⚠Avoid companies with high levels of debt.
➡Check Debt to Equity Ratio & Interest Coverage Ratio.
✅Debt to equity < 2 & Interest Coverage > 2 is considerable.
3. ROE & ROCE
These two metrics help to know the ability of the company to generate profits from investments in the company and how efficiently the company is using its capital employed, i.e debt + equity.
These two metrics help to know the ability of the company to generate profits from investments in the company and how efficiently the company is using its capital employed, i.e debt + equity.
What should you do?
✅Compare the ROE & ROCE of the company with its peers. Value > 10% is considerable.
⚠Don’t just consider the two metrics for one year.
✅It should be seen as an average & over a period of years to have a more clear idea about the functioning of company.
✅Compare the ROE & ROCE of the company with its peers. Value > 10% is considerable.
⚠Don’t just consider the two metrics for one year.
✅It should be seen as an average & over a period of years to have a more clear idea about the functioning of company.
4. Sales & Profit Growth
Every company needs sales and profits to survive in the market. The growing % of these two indicates that the company can capture more market share & grow in new markets while improving efficiency to carry out its operations.
Every company needs sales and profits to survive in the market. The growing % of these two indicates that the company can capture more market share & grow in new markets while improving efficiency to carry out its operations.
What should you do?
✅Consider taking 3 or 5 year growth figures to know if the company is consistent in increasing its sales & profits over the years.
⚠ Check if the profit or sales growth is due to a high level of other item sales or extraordinary income.
✅Consider taking 3 or 5 year growth figures to know if the company is consistent in increasing its sales & profits over the years.
⚠ Check if the profit or sales growth is due to a high level of other item sales or extraordinary income.
5. Competitive Advantage & your Circle of Competence
•Find companies whose business you understand.
•Look for an advantage the company has over its peers.
•Find companies whose business you understand.
•Look for an advantage the company has over its peers.
To make this easy, you can filter these kinds of companies in seconds on ticker.finology.in/screener by using simple queries you want like "Promoter Pledging Q1 < 30"
If these points look hard, then visit ticker.finology.in/bundles to find stocks list based on various strategies specially made for you💙
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