[thirugata]

Originally Posted by Sran

Rs 6000+ shares for long term? I am not into trading deeply or anything just a regular Raj, so I mean how much shares can anyone buy at that price point, it's a lot of money for 500 or 1000 shares. I think these stocks are generally traded intraday for swings using margin or by asset traders. I can see sep,21 it was at 7800 so its support is already near 7500.

CMP of the stock should not be deciding factor when buying stock.
Return should be calculated based on the profit % for invested money.
So buying 1 stock at 6000 and that going to 7000 is same as buying 1000 stocks at 6 and it going to 7.

[fordday]

I was looking at some of the stocks just out of curiosity.

Seems Footwear stocks are on fire. Respectable company like Bata is trading at 231 PE with 13 times its book value. Couldn't understand what is the underlying basis for this. Is this a bubble?

VIP Industries trading at 127 PE with 15 times its book value.

PVR and Inox are at 9 times their book values without any positive earnings.

Are these ratios losing their relevance or 'this time its different'?

[SmartCat]

Originally Posted by fordday

IRespectable company like Bata is trading at 231 PE with 13 times its book value. VIP Industries trading at 127 PE with 15 times its book value. Couldn't understand what is the underlying basis for this. Is this a bubble? Are these ratios losing their relevance or 'this time its different'?

Whenever there is a quarterly loss, PE ratio ends up being misleading. For Bata, last year's covid lockdowns resulted in signficant losses during Jun'21 quarter



Since the displayed PE ratio is the 'trailing PE' (Earnings is sum of last 4 quarters earnings), you will see 3 digit PE ratio sometimes. In such cases, you have to look at PBV ratio instead and compare it with its past history. In screener, you can find PBV ratio chart for Bata:



Bata is trading at PBV of 13, which is equal to 2019 peak valuations but higher than its past average.

Book value OR networth of a business changes slowly, unlike earnings. So it is a better measure of valuations for stocks that have unstable earnings. To give an analogy:

- Let's say my networth in 2020 was Rs. 50 Lakhs and my annual salary was Rs. 12 Lakhs per annum
- Because of covid, my salary was cut drastically and I earned just Rs. 3 Lakhs per annum in 2021.
- Although my earnings crashed by 75%, my networth would have not fallen 75%. I would still have Rs. 45 to 50 Lakhs or so in the bank account

[Jaguar]

Originally Posted by SmartCat

OK, just remember that the list needs further "due diligence". It is just the initial shortlist of candidates.

DIVIDEND YIELD STOCKS:

Smallcap Dividend stocks:
https://www.screener.in/screens/3943...lcap-Dividend/

None of the screens in this post seem to work anymore. Could you please help with a sample formula or an updated link?

[fordday]

Originally Posted by Jaguar

None of the screens in this post seem to work anymore. Could you please help with a sample formula or an updated link?

Smartcat later on posted a new link. Try this

[SmartCat]

Originally Posted by Jaguar

None of the screens in this post seem to work anymore. Could you please help with a sample formula or an updated link?

Originally Posted by fordday

Smartcat later on posted a new link. Try this

Yeah, I changed something and it got messed up. Link posted by fordday works
https://www.screener.in/user/28210

[ProBro]

Originally Posted by SmartCat

Yeah, I changed something and it got messed up. Link posted by fordday works
https://www.screener.in/user/28210

Just a suggestion from my side, I haven't really checked your dividend yield screens (mid,micro) but do make sure that the companies in these yield screens have less debt, or maybe add a Debt to Equity metric. What happens is when companies aren't able to sustain a certain amount of dividend from their Profits, they might incur debt to continue the payout and that is something which should be avoided (absolutely!) especially since we might be in a tight economic condition (with USA on the brink of a major recession or possibly a depression, the next qtr. gdp growth will either save them or be the nail in coffin), since if the cost of borrowing increases, naturally incurring more debt to pay dividends will hurt the company's financials.
However if it is something which you've already taken care of, absolutely ignore this message. Just wanted to put it out forward, so those who don't know can update accordingly

[SmartCat]

Originally Posted by ProBro

Just a suggestion from my side, I haven't really checked your dividend yield screens (mid,micro) but do make sure that the companies in these yield screens have less debt, or maybe add a Debt to Equity metric. However if it is something which you've already taken care of, absolutely ignore this message. Just wanted to put it out forward, so those who don't know can update accordingly

Problem with entering debt to equity ratio filter in a screener is that it takes out all NBFCs and banks from the list. That's because all NBFCs and banks have debt to equity ratio between 4 (HDFC, manappuram fin) and 15 (low quality psu banks).

So its best not to include that in a screener but keep the debt to equity ratio in mind before investing. My favorite metric is interest outgo divided by (operating profit + other income if any). If it is more than 25%, I do not invest in such companies.

Eg: Adani Enterprises



In FY22, Adani Enterprises had an (operating profit + other income) of (3700 + 1000) = Rs. 4700 cr. Their interest outgo was Rs. 2500 cr. This means their interest outgo is 53% of their operating income, and hence highly leveraged. Beyond 25%, I think a company will be susceptible to change in interest rates or weak economy.

[ProBro]

Originally Posted by SmartCat

Problem with entering debt to equity ratio filter in a screener is that it takes out all NBFCs and banks from the list. That's because all NBFCs and banks have debt to equity ratio between 4 (HDFC, manappuram fin) and 15 (low quality psu banks).

So its best not to include that in a screener but keep the debt to equity ratio in mind before investing. My favorite metric is interest outgo divided by (operating profit + other income if any). If it is more than 25%, I do not invest in such companies.

In FY22, Adani Enterprises had an (operating profit + other income) of (3700 + 1000) = Rs. 4700 cr. Their interest outgo was Rs. 2500 cr. This means their interest outgo is 53% of their operating income, and hence highly leveraged. Beyond 25%, I think a company will be susceptible to change in interest rates or weak economy.

Right, I forgot about NBFCs. In your metric, can the operating profit + other income replaced by the net profit (including those from investments too)? And since you are looking at interest, Interest Coverage ratio might also prove to be useful. (which in case of Adani Enterprises would be very less, 1.38!)
Also can you shed some light on Interest Outgo too. Thank You

[SmartCat]

Originally Posted by ProBro

Right, I forgot about NBFCs. In your metric, can the operating profit + other income replaced by the net profit (including those from investments too)?

Net profit should work too I guess, but I prefer (operating profit + other income) because it is cash flow from business. It gives an idea about ability of business to pay off interest costs from cash flows.

Net profit can be low for asset heavy businesses like NTPC (for example) because depreciation costs will be high.

[SmartCat]

Mod Note:

Let's keep this thread exclusively for fundamental analysis and long term investing in stocks. I have renamed the old 'derivatives thread' to 'Technical analysis, futures & options thread'
https://www.team-bhp.com/forum/shift...ns-thread.html (The Technical Analysis, Futures & Options Thread)

All recent posts related to technical analysis have been moved to the above thread. Since it looks like lots of folks are interested in technical analysis, use the above thread for discussions on:

- Technical analysis of stocks, NIFTY, BANKNIFTY etc
- Futures trading (stocks, NIFTY/BANKNIFTY, commodity futures, currency futures)
- Options trading strategies (indices/stocks)

[Imran.Syed]

Smartcat, your threads have singlehandedly transformed my understanding of the markets. I have learned more from your (and Samurai's) posts than I have from years of trying learn from YouTube channels.

Thank you so much.

So now that the interest rate bonanza is over and the governments worldwide are reaping what they sowed, your screeners have slowly started to fill up again which is good news for most of us investors.

But I still don't think the markets are taking into account the Indian economic conditions, the current correction is due to the international news of recession and inflation.

People are arguing that DIIs and retail investors are shielding the Indian markets from even more losses. What do you think of this?

[SmartCat]

Originally Posted by Imran.Syed

your screeners have slowly started to fill up again which is good news for most of us investors.

Problem with most screener filters is that they are primarily focused on growth parameters (profit growth, RoE etc) and gives little or no weightage to valuations (PE ratio, dividend yield). Such screeners will be populated with stocks all the time - even at peak bull market or bubble territory.

However, my valuation focused screener filters allows you to time the markets. We buy when valuations are reasonable and sell (or not buy) during market peaks.

But I still don't think the markets are taking into account the Indian economic conditions, the current correction is due to the international news of recession and inflation. People are arguing that DIIs and retail investors are shielding the Indian markets from even more losses. What do you think of this?

End of the day, stock valuations are highly dependent on bank interest rates (Indian or US or a mix of both).

- If Indian interest rates rise from 5% to 10% or 12% on 1 year FD, you can be rest assured that DII/retail investors will flock to FDs and give stocks a miss.
- If US money market funds start offering 4% or 6% (instead of 1 to 2%) pa, money will flee US stocks and get into money market funds.

That's why every equity analyst watches the Fed and RBI actions.

[thirugata]

We are Team BHP, driving and travel enthusiasts & this is a thread about stock market. So here I make an attempt to combine these topics in this post.

Similarities between driving & stock market:

1) On road anyone who drives faster than you is reckless and anyone driving slower is nuisance.
In stock market anyone who earns more than you is a gambler and anyone who earns less knows nothing.

2) While driving we choose the best route based on the time of the day or weather condition so that we reach our destination safely and quickly.
In stock market we choose when and which stock to buy at what time and sell at what time so that we reach our target at the earliest without making losses.


Similarities between travel & stock market:

2 or more people can go to same destination at the same time and come back with different perspectives/stories.
(There are enough travelogues here where group of people have gone together to the same place and written beautiful blogs which show different perspective about same place).
Similarly, people can have a look at same parameters / stocks / chart and can have different opinion about it.

If you can think more such similarities do share, it would be an interesting read.

[RoadTiger]

Originally Posted by RoadTiger

Unsolicited advice, based on my investing experience

Markets likely to go down further
Could be the start of a multi-month downturn
Dont be sucked into investing too early, assuming stocks look cheaper than last month
Dont guess the bottom - wait for definitive signs of an upturn

The market run was driven by a lot of cheap money (due to low/ zero interest rates globally) chasing assets - and there were excesses - leading to this massive inflation world over particularly with US sitting at 8-9% (unprecedented in decades). The Fed (and the US Govt) now realizes there is a need to tame the inflation monster - and doesnt mind inflicting some pain on the equity markets to do the same. Will be a very tough act for the Fed to raise rates aggressively as they should (need to) over the next year or so - without breaking something.

Posted this a month back - just as relevant IMHO ! Thoughts welcome.

Also, in my experience, every few years - there are transient periods that could last from a few weeks to a few months - when either there is euphoria or complete gloom. At such times stock picking doesnt matter - everything rises/ falls in line with the strong market undercurrent at play. This seems like one of those times