Saturday, September 19, 2015

For First Time Investors ....



 Courtesy: Economic Times
If you wish to invest in the stock markets and know nothing about them, one convenient way is to opt for mutual funds. If you are keen on investing directly, then do allocate the necessary time, energy and resources.

Show commitment

First, spend time on understanding a company's fundamentals: sales, net profit, margins, etc.

Also study  market movements , because sentiments play a major part in driving stock prices. Sentiments in turn are driven by expectations of what will happen in the future.

Have a long-term horizon

Like a company shareholder, give your investments time to grow. Enter the markets with realistic return expectations, and not outrageous ones. Remember that time is the best antidote to risk: the longer your investment horizon, the lower the volatility of returns ..
Keep emotions in check

Do not turn euphoric when the markets surge, nor become despondent when they plumb new lows. Even if you develop a well-researched, diversified portfolio and hold it for the long term, inevitably some of your stock holdings will turn out to be duds. When that happens, respond based on your training and intellect, rather emotionally.

Be prepared to interpret data

While institutional investors have access to expensive databases, you will have to depend on publicly-available information. Quarterly results, annual reports, and shareholding pattern are available on NSE and BSE's web sites. Scout for more information in the media, and on Google Finance and Yahoo Finance. Technical market data like share prices and volumes is available on company web sites, and old research reports on brokerage houses' s ..

Analyse, then buy

Analyse the company with the same level of rigour as you would if you were the owner. Initially stick to sectors that you know best. Doctors, for instance, should invest in pharma companies first. Compare a company's ratios with the index and industry historical averages. Look for the following ratio-based characteristics in a stock you are keen on: low PE, low PB, high dividend yield, low debt to equity ratio, and high RoCE and high RoNW.
With the markets split between good but overvalued stocks and poor but undervalued ones, here are a few ratios you should look up before you buy.

1. PRICE TO EARNINGS RATIO

The most commonly used ratio, it compares the price of a stock to the company's earning per share (EPS). The EPS can be either for the past four quarters (historical or trailing PE) or for the coming four quarters (forward PE).


2. PRICE TO BOOK VALUE RATIO

This ratio compares the price of a stock with its book value. The book value is the net value of the company's total assets minus its liabilities. In other words, it is what shareholders will be left with if the company goes bankrupt.

3. PRICE TO SALES RATIO

This ratio compares the price of a stock to the revenue earned per share. The revenue for the past four quarters is used in this calculation.
4. DEBT-TO-EQUITY RATIO

It measures a company's leverage by comparing its debt with its equity base. The ratio indicates the proportion of the company's assets that are being financed through debt.
5. ASSET TURNOVER RATIO

The ratio measures the sales generated for every rupee worth of assets. It shows a firm's efficiency in using its assets to generate revenue.
BUY,MONITOR,SELL

Since monitoring many stocks becomes difficult, stick to 15 or 20 or a number comfortable to you . If derived from diverse sectors, that many stocks offer adequate diversification. Monitor your stocks' fundamentals and valuations at least once every quarter. Sell only to meet a financial obligation, to re balance, when fundamentals deteriorate, or when the stock becomes overvalued. Also, sell if you can replace one with a better option. Adhere to these basics and you could well surprise yourself with your performance.

72 comments :

  1. Sir thanq for the post.
    Sir ur view on ashapura intimates fashion and coromandel international

    ReplyDelete
  2. Ashapura Intimate's net operating cash flow turned into negative in this FY , So I prefer to wait and watch at the moment .

    Not tracking Coromandel Intl.

    ReplyDelete
  3. Sir your thoughts on HFCL, Alpa Labs and DB Realty for a very long term perspective?

    ReplyDelete
  4. Hi VP sir,
    Thank you for your valuable information.
    I am planning yo trade for my first time,is it the right time to enter as I am planning to trade with mid cap stocks?

    ReplyDelete
    Replies
    1. I am not a supporter of trading by retailers . Trading is only for professionals and only in stocks with enough liquidity . I don't think mid caps are good to trade even in the case of professionals due to liquidity issue . My opinions are only for genuine long term investors and not intended for traders.

      Delete
  5. Dear VP what is your call on Olympia industries... Are you tracking it. Also with additional allotment of shares, total outstanding shares of Subex becomes so huge. Do you think it is value pick with this additional share capital base

    ReplyDelete
    Replies
    1. I don't know what is your understanding by the term ' Value Pick' .Till last year Subex was in loss , how one can specify such a company as valuepick . It may be a possible turnaround pick.

      Delete
  6. Sir your view on vindhya telelinks ltd , Easun Reyrolle pls suggest

    ReplyDelete
  7. Sir, your take on Tata Elxsi, Zydus Wellness and IDFC. I intend to buy these but seems to be expensive given the current market rates. Your thougts will greatly help. Thank You

    ReplyDelete
    Replies
    1. IDFC is an already suggested one and no change in previous view

      Not tracking others

      Delete
  8. Hi sir please tell me what your view on orchid chemical for long term view promoter pledge share more

    ReplyDelete
  9. Hi Sir,
    Your views on sundram fasteners...

    ReplyDelete
    Replies
    1. Company is good , but a good company may not be a good investment at any price . Enter at right price.

      Delete
  10. Dear VP,
    What do you think of your previously recommend stock mm forgings ?Would you still recommend holding on to it for long term?
    Also how is ifci for a long term investment?

    ReplyDelete
    Replies
    1. MM forging is a decent company , but don't expect same speed in price appreciation from here on .

      Not tracking IFCI

      Delete
  11. HI Sir, can you please share your views on SMRUTHI ORGANICS LTD

    ReplyDelete
  12. Sir, Firstly Thank you for your selfless service. You have been a great guide to small investors like me. What are your views on Kaya Ltd., Dhanuka Agritech and Sanghi industries... Are they good for accumulating ??

    ReplyDelete
    Replies
    1. Kaya is a potential business , but I doubt whether current price is suitable for low risk investors .

      Not tracking Dhanuka

      Sanghi is not a bad one , but sector revival is the key

      Delete
  13. Dear Sir,

    I am a late entrant in the stock Astra Microvave @ 140/-.Please advise if this is still a hold for long term.

    ReplyDelete
    Replies
    1. Suggested around Rs. 35
      Neutral at CMP

      Delete
  14. Sir, what's your latest views on your old pick Genus Power Infrastructures Ltd.

    ReplyDelete
  15. Your opinion on torrent pharma & glenmark

    ReplyDelete
    Replies
    1. Suitable for long term passive investors

      Delete
  16. Sir your views on Shemaroo Entertainment

    ReplyDelete
  17. Sir your thoughts on TALWALKERS ,Asian Granito India

    ReplyDelete
  18. can we buy rolta india at CMP and also united breweries

    ReplyDelete
  19. VP ji kindly share ur views on meghmani organics, trident, arvind remedies.

    ReplyDelete
  20. Dear Sir,

    Bin Laden group of Saudi seems to be in trouble after the unfortunate incident at Mecca. Will this negatively impact IL&FS construction in the longer run ?

    ReplyDelete
    Replies
    1. Not expecting any serious negative impact.Instead SBG may look beyond Saudi more aggressively for growth and it may turn positive for ILFS Engg in long term.

      Delete
  21. Dear sir any views on Zicom electronic for buy

    ReplyDelete
  22. Dear sir any promising small cap pharma scrip for turnaround or value buying tks

    ReplyDelete
    Replies
    1. Lot of companies from Pharma space already suggested . Positive on Jubilant Life and Krebs with a minimum two year view.

      Delete
  23. Hello Sir...I have a doubt..Why do Companies like Noida Toll bridge trade at lower valuations? Is there any specific reasons? I may be wrong, but I think this business is relatively stable, with decent predictable cash flows, paying good and consistent dividends. It looks like a safe investment even in economic downturns.

    ReplyDelete
    Replies
    1. Nowadays, Growth of business and floating stock in market is also an important factor deciding price trends.

      Delete
    2. Yes Sir. I agree. I guess NTB would be good for a risk averse investor who will be happy with Dividend incomes.

      Delete
  24. Your views on Tata motors and motherson sumi sir??? Are the recent declines a good buying opportunity for long term?? Thank you 😊

    ReplyDelete
  25. Replies
    1. Not sure about your return expectation from stock market . MIC returned more than 500 % in last one year.

      Delete
  26. Sir,
    Will existing microfinance companies feel pressure due to new small bank licenses by RBI?

    ReplyDelete
    Replies
    1. Market is vast enough to co-exist both

      Delete
  27. Dear VP Sir

    Kindly share your views on Ashiana housing, Sobha, motherson sumi, Haldyn glass, Shalibhadra finance and Nitin spinners...Thanks

    ReplyDelete
    Replies
    1. Sobha is comparatively good from the real estate sector , but sector revival may take more time .

      One can go for an SIP mode purchase in Motherson

      Not tracking others

      Delete
  28. Sir Namaste.Agro Tec foods,va tech wabag,dic India .please share your views on these companies at present price

    ReplyDelete
    Replies
    1. Opinion about all these stocks already shared

      Delete
  29. Hello, VP sir can I inter mic electronic at current level.

    ReplyDelete
    Replies
    1. This decision can be taken by each investor itself based on one's risk profile . My opinion about MIC already shared

      Delete
  30. sir, for the last 8-10 years , basant agro is in the same price range, even though sales are higher as well as eps., sir your valuable comments on current results.

    ReplyDelete
    Replies
    1. In between its Face Value splitted from Rs.10 to 1

      Delete
  31. Hi VP sir...i have one question regarding skm egg...sir do u believe that the business is scalable to the extent avanti feeds has been able to scale? I am asking becoz the total export market as of now is abt 500 crores...so even if skm does buy out somebody and expand some of its existing capacity and reach 500 cr revenue, it would be just twice the size if what it is now...how would further growth come sir and is there a big enough market in order for skm to post continuous growth? Would love to hear your views sir...thanx in advance

    Krunal

    ReplyDelete
    Replies
    1. I believe ,most of the investors are misunderstanding the business model of Avanti and believing company's main business is Processed Shrimp Export . In reality , out of the Rs.1776 Cr turnover company reported in last FY , just Rs.260 Cr is from Shrimp Processing and the rest ( Almost Rs.1500 Cr ) is from feed manufacturing . As you are aware , feed manufacturing is a volume based business with low margin . I am not sure about the secret of high margin of Avanti .this is the reason I expressed neutral view on this stock when many readers asked about fresh entry at higher level .( I suggested this around Rs.65 , when risk reward was favorable.)

      So no meaning in comparing Avanti and SKM , where Avanti is a feed producer ( though its image is something different) , SKM is a pure value added food ingredient manufacturer.

      Delete
  32. Sir, used search option but did not find your views on Talwalkars Better Value Fitness Ltd. Can you please share again.

    ReplyDelete
  33. Hi VP sir, How about vakrangee shares? Is it recommend to buy now? Please suggest

    ReplyDelete
  34. HI VP Sir,

    Please provide your views on Man infra, Co have very low debt compare to peers.

    Regards

    ReplyDelete
  35. Sir please reply what is opinion upon salzer and pantalon fashion at this time as I want to invest in both stocks thanks

    ReplyDelete
  36. Sir, your views on IOC at current prices from long term perspective.

    ReplyDelete
  37. What about RS Software at current price

    ReplyDelete
  38. Hi Mr. Value Pick,

    I have been following your blog and made significant investments based after researching your recommendations. But one thing that perplexes me is the recent raise from dead episode of ERA INFRA. I have tried to search for reason but could not find one. Do you know if there is any change in scenario. Do you think it is less of a risk than it was before or do you still recommend it for high risk takers. Any further insight is much appreciated.

    ReplyDelete
  39. Dear Sir, What is your view on Jayant Agro and Camlin Fine? I wanted to search your views in case you have talked about it earlier but could not. Earlier whenever we use to type a particular stock in "search", we could get all the post and messages wherever the particular stock was mentioned.

    I remember once u have shared the link to find out your past opinion and replies on any stock. Would be thankful to you if you could share the link once more.
    Thank you

    ReplyDelete
  40. Dear VP sirji,
    Today news came in pantaloons fashion retail ltd
    "US Co. Drags Pantaloons to Court over infringement Row". So sir this news will impact the shares. If it will impact den please share ur views .
    Regards,
    Arun.

    ReplyDelete
  41. Dear VP sir

    Pls share your views on Enkei wheels, Insilco and DeNora. Thanks

    ReplyDelete
  42. Hi VP sir,
    What are ur views on global economy changes. Are we heading for global recession?
    From your exp can u share how stocks with low FII exposure gets impacted in such scenarios.I am aware DII are still continuously buying in Indian market.
    Regards,
    Vinay

    ReplyDelete

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