Investment Ideas

Where I got Investment Ideas & 

what information do we collect to identify the company stock

In the investment world, it is very difficult for any investor how to get investment ideas. Investment ideas find in any source. Some of the sources are:

1.      Read Newspapers on daily basis- Find company-related information, read policy articles, management interviews, etc.

2.     Read Business Magazine

3.     Research upcoming IPOs

4.     Research old IPOs last ten years. 

In the above sources, we find several companies and note down the general information and categories of the company of stock in the present situation to the following categories 

(which is Described By Peter Lynch )

• Slow Growers
• Stalwarts
• Fast growers
• Cyclical
• Asset play
• Turn Around 

Apply the criteria on the basis of the company stock categories. If the company is attractive on the basis of criteria, we buy a few shares in a stock that meets your criteria to force you to follow the business.

Then finally we understand the company in four parameters:

Business

Understand the business from various authentic sources:

• Annual report is a report which is published by the company every financial year, Read at least 5 financial years which is helpful to you to understand the business of the company. It can be downloaded from the company website under the investor section and downloaded from the exchange website also. 
• Company websites are also a very source for understanding the business of the company. 

Understanding the business of the company is very important for every investor, when you understand it then you simply describe the business in your own words that which covers the following questions:

• How the business operates?
• How does the business manufacture products or produce its services?
• How does it distribute these goods and services to the customer?
• How does the business make money?
• Understand the competitive advantage of the business?
• Understaassociatedk associates the business?
• Core customer of the business and retention rate of the customer is important for checking the quality of the business.
• Evaluating the strengths and weaknesses of a business – Competitive advantage.
• Evaluating the operating metrics of the business according to the Industry for example –Retail industries (Same-store sales, basket size, sal,es per square foot and average ticket).
• Compare the metrics with the competitors. 

Management 

• Read the interview of the management,
• New article and information about management.

Financials

• Check the business balance sheet.
• Debt and coverage debt ratio ( EBITDA to interest expense, cash flow from operations to interest expenses), current ratio, debt to equity ratio, and debt to total assets ratio.
• Cash position
• ROIC – Return on investment capital.
• Earnings and revenue growth
• Working capital needs.

Valuation 

• Discounted cash flow model (based on earnings  or free cash flow)

Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on Investment or recommend buying and selling any stock