tocks t hat actual y w
arrant a
ttention a
nd
the priority of focus.
There are innumerable number of books, articles, blogs, videos available
on the internet t hat claim t o and m
ight even give y
ou t he n
irvanic w
isdom i n
this area. Rather than going through the motions re-churning the same
(aka ‘reinventing the wheel’), I am going to highlight some of the good
books and/or articles that I recommend in t his s
pace a
nd s
ome o
f t he more
useful items/topics/criteria that need comprehensive focus and
understanding while you go through the material.
First up, here are some of the keywords, key c
oncepts a
nd k
ey c
riteria t hat
needs focussed understanding. There are many more, it can be cal ed an
‘ocean in itself’, but nevertheless, it is always good to keep a handy set of
core-criteria which are fit for purpose.
Key Criteria Set - the ‘must know’ list!
Note: Once more, ‘what, which, when, how, why’ are our friends.
● What is it?
● Which qualification (genre) it fal s under?
● How is it used/valued?
● When is it used in terms of context?
● Why is it important?
Books
Note: (** Book excerpts are the summary of books from books.google.com)
Fundamental Analysis for investors - Raghu Palat
“Fundamental analysis is an essential, core skil in an investor's tool-kit for
evaluating a company on the basis of its track record: sales, earnings,
dividends, products, management, etc., as wel as the economic and industry
outlook. It is a value-based approach to stock market investing solid and
prudent that typical y offers handsome profits to the long-term investor. Raghu
Palat's book wil help you master the essentials of fundamental analysis. It
clearly explains, with il ustrations, al the analytical tools of economic, industry
and company analysis, including ratios and cash flow. It shows you how to
judge a company's management and its products, and discover what actual y
lies behind the figures and notes in a company's annual report. And, how to
calculate the intrinsic value of a share.”
One Up On Wall Street: How to Use What You Already Know to Make
Money in the Market - Peter Lynch
“Penned by the famous mutual-fund manager, Peter Lynch, this book elaborates
the many advantages that an average investor has over professionals and how
they can help them reach financial triumph”
The Five Rules for successful stock investing - Pat Dorsey
“Written by Morningstar's Director of Stock Analysis, Pat Dorsey, The Five
Rules for Successful Stock Investing includes unparal eled stock research
and investment strategies covering a wide range of stock-related topics.
Investors wil profit from such tips as:
* How to dig into a financial statement and find hidden gold . . . and
deception
* How to find great companies that wil create shareholder wealth
* How to analyze every corner of the market, from banks to health care”
How to Avoid loss and earn consistently in the stock market -
Prasenjit Paul
“Investing in high-quality business (stock) at the right price and holding them
for a reasonable period is the only way for wealth creation.Written in an
easy-to-understand and simple language, this book wil guide you on how to
select fundamental y strong business, when to buy and sel stocks and above
al how to minimize or avoid loss in the stock market”
Everything you wanted to know about Stock market investing -
TV18 broadcast
“From financial planning and the impact of inflation on investments, from
equity investing strategies like top-down and bottom-up investing etc to risk
mitigation measures like value averaging, using market volatility, this book
makes your knowledge on investing in stocks holistic.
“Everything you wanted to know about Stock Market Investing” also goes
beyond just explaining how markets work. With practical tips and
il ustrations, axioms, action points and test questions it prepares you for
your practical journey into the world of stocks.
The book not only helps the investor comprehend the nuances of equity
investing for wealth buildup, it also helps the investor understand macroeconomic aspects and their
impact on businesses, how to respond in times of panic, how to avoid being the victim of stock market scams, and final y, how to compute equity investment returns before and after tax”
Zerodha Varsity - https://zerodha.com/varsity/
● https://zerodha.com/varsity/module/introduction-to-stock-markets/
● https://zerodha.com/varsity/module/fundamental-analysis/
Investopedia - https://www.investopedia.com/university/
● https://www.investopedia.com/university/fundamentalanalysis/
● https://www.investopedia.com/university/al /fundamental-analysis/
=========================================================
Apart from the above there are innumerable number of video trainings that
you can search and dig out from sites like YouTube etc which a
re free a
nd
on MOOC sites like Udemy at a nominal cost. These wil cover a range o
f
fundamental and foundational aspects of Stocks, Equities and Investing in
general.
Unless you are a person who absolutely detests text based learning and
prefers video as a medium, I would urge you to use the above tutorials /
books as a basis to build a solid foundation for screening.
As a caveat, I find that m
any o
f the f ree v
ideos a
vailable o
n t he i nternet a
re
many times incomplete, incorrect, misleading while not c
onveying a
h
olistic
end-to-end perspective in a way that the above books et al. do so
effectively.
Customizing screener.in
In the previous chapters, we looked at t he b
asic S
creener.in a
spects -
user
registration, logging in and basic views.
Armed with enough fundamental foundational knowledge now, (you have
gone through some of the material mentioned in the previous chapter,
haven’t you!!!!), let us look at customizing screener.in for better effect.
By default, when you log into screener.in and search for a stock, you get
something like this:
We see some baseline fundamental parameters on the displayed stock
details. Things like Market Cap, Book Value, Price, P/E, ROCE, ROE etc
show up. While these are obviously key point in time parameters of
importance, there are many others that can be configured to display. With
those showing u
p, w
e w
ould h
ave a
m
ore comprehensive h
olistic f eel o
f t h
e
stock valuation.
Steps to Configure and Customize
Use the ‘Add Quick Ratio’ option (see the snip ahead) - just type what you
want in it to configure.
(Look at the same result now with ‘Debt to Equity’ parameter added via
‘Add Quick Ratio’ option - this parameter was not present in the previous
default snip view)
I am sure you the reader are now asking yourself - what are the available
options? Is there a list ? Yes, there is -
Go to screener.in main page and look at the bottom of the page below the
‘create a custom query’ box on the right side, you wil see an option
“Show All Ratios”
Clicking on the Show Al Ratios wil launch the Ratio Gal ery that has the
list of al options categorised per the fundamental characteristic they fal
under.
So - now is the time to map your fundamental analysis knowledge to the
real world application of the same.
If you have gone through the
book/tutorial materials in the previous chapter, you would have lined up a
dozen or two of criteria that matters most with what your goals are in the
stock market. If you haven’t done that yet, I would urge you to revisit the
previous chapter and go through the m
aterials recommended t here t o b
uild
a solid sound foundation for screening stocks.
Use the most interesting set of criteria you have identified to customise
your screener.in.
An example fol ows……………...
An example is snipped here……...screener view with custom configuration.
This gives us a more holistic view of a stock’s fundamentals than the
default view throws up.
The Screens
Here’s where the ‘rubber meets the road’. We wil use al the knowledge,
information, wisdom we gleaned through this journey thus far to come up
with multiple s
creener s
creens (
queries) t o dig o
ut g
ood a
nd ‘ fit f or p
urpose’
stocks from the stock market universe of choices.
Further, we wil categorize them under different criteria brackets so we c
an
use them a
ccordingly depending o
n t he n
ature of o
ur o
wn persona, a
nd o
ur
respective context and goals for investing.
Always remember, not everything wil suit everyone and there is real y no
‘ one size fit al ’ like most things in life and nature. To make an effective
stock pick, we need to understand ourselves, our persona, our risk profile
and context. We always need to be clear on our goal - return expectation
and time/period of intended holding. The more passive one w
ants t
o b
e,
the more conservative one should be on both of the aspects above.
Further, the set of screens a
nd q
ueries b
elow s
hould b
e c
onsidered a good
starting point to go ahead - experiment, play around, try o
ut a
nd c
ustomise
it for your own purpose. There i s r
eal y n
o ‘ holy g
rail’ of s
creener q
uery t hat
is ‘guaranteed’ to work under any context. If that were so, most market
participants would be walking-posing “Warren Buffet(s)” just by showing up.
Please use the queries not as a ‘holy grail’ or epitome of perfection, b
ut a
s
a starting point to tickle your curiosity to dig, learn further and build a
sustainable strategy.
Another empirical suggestion to that e
nd - o
ne d
oes n
ot h
ave t o put i n t ons
of money into a testing model to gauge or help you measure the returns
and efficacy of an approach. Use a customised query - just al ocate a
smal testing amount into your chosen candidates based on the query
results and characteristics you seek and let market provide you ‘rich
feedback’ which you can use to adapt and rework.
This keeps i t s
imple -
t his k
eeps it evolving, p
rogressive a
nd a
daptive. -
t his
keeps it humble.
Tip: Use these screener queries as a starting point. Modify, tweak,
adapt them as you deem fit and gain experience and feedback from
the market.
Growth oriented screens
Rationale:
These screens look p
rimarily f or ‘ growth’ - t hat i s i ncreased o
r c
ompounded
Profit, Sales, Margins, E
PS e
tc. o
ver y
ears o
r q
uarter o
r YoY (
year o
n y
ear)
or QoQ (Quarter on Quarter) basis.
Since, markets general y reward growth - especial y recent growth, one
could look to find ‘in-vogue’, ‘in-momentum’, ‘in-focus’ stock candidates in
the results. This could be used to invest in such candidates for a shorter
time-frame or til such a time as the growth is a
ctual y o
bserved u
nder t heir
quarterly numbers churned out every quarter.
----------------------------------------------------------------------------------------------------
1) Profitable stocks - recent periods
Summary: Identify companies that have turned out healthy Profits and
Margins in recent year(s) and quarter(s).
Net profit > Net Profit last year AND
Net profit > Net Profit preceding year AND
Net Profit latest quarter > Net Profit preceding quarter AND
Net Profit latest quarter > Net Profit preceding year quarter AND
Net Profit preceding quarter > Net profit 2quarters back AND
Net profit 2quarters back > Net profit 3quarters back AND
QoQ Profits > 10 AND
YOY Quarterly profit growth > 10 AND
Profit growth > Profit growth 3Years AND
OPM > OPM last year AND
OPM > OPM preceding year AND
OPM latest quarter > OPM preceding quarter AND
OPM latest quarter > OPM preceding year quarter AND
NPM latest quarter > NPM preceding quarter AND
NPM latest quarter > NPM preceding year quarter
Highlights:
This screen uses Yearly and Quarterly Profits and Margins
(both Operating ie OPM and Net ie NPM) to screen for good matching
stocks.
2) Growing in both Sales and Profit in recent periods.
Summary: Identify companies that have turned out healthy Profits, Sales
and Margins in recent year(s) and quarter(s).
Here, we add Sales figures i nto t he m
ix w
hen compared t o S
creen 1
). This
method is termed ‘progressive screening’ where y
ou increase the
ask/demand in terms of quality and quantity
Net profit > Net Profit last year AND
Net profit > Net Profit preceding year AND
Net Profit latest quarter > Net Profit preceding quarter AND
Net Profit preceding quarter > Net profit 2quarters back AND
Net profit 2quarters back > Net profit 3quarters back AND
Sales > Sales last year AND
Sales > Sales preceding year AND
Sales latest quarter > Sales preceding quarter AND
Sales preceding quarter > Sales 2quarters back AND
Sales 2quarters back > Sales 3quarters back AND
QoQ Sales > 10 AND
QoQ Profits > 10 AND
YOY Quarterly sales growth > 10 AND
YOY Quarterly profit growth > 10 AND
Profit growth > 10 AND
Sales growth > 10
Highlights: This screen uses Yearly and Quarterly Profits, Sales and
Margins (both Operating ie OPM and Net ie NPM) to screen for suitable
stocks.
3) Historical and present Profit and Sales growing at and above 10%
Summary: Identify companies that have turned out greater than 10%