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Stock Selection Masterclass Notes

The document discusses three common problems that investors and traders face: 1) Not knowing how to properly manage money, 2) Being unaware of their net worth and how to manage it, and 3) Inability to comprehend financial reports which is important for success. It then describes a method for finding long-term stocks to invest in by applying filters to automatically select the top 10 stocks that meet criteria like market capitalization, sales growth, return on capital employed, promoter holding, and returns. The filters are applied on a stock screening website to generate a ranked list of 10 recommended stocks.

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Rupesh P
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466 views

Stock Selection Masterclass Notes

The document discusses three common problems that investors and traders face: 1) Not knowing how to properly manage money, 2) Being unaware of their net worth and how to manage it, and 3) Inability to comprehend financial reports which is important for success. It then describes a method for finding long-term stocks to invest in by applying filters to automatically select the top 10 stocks that meet criteria like market capitalization, sales growth, return on capital employed, promoter holding, and returns. The filters are applied on a stock screening website to generate a ranked list of 10 recommended stocks.

Uploaded by

Rupesh P
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Problem Investors/Traders Face

Problem #1 - “People do not know How to manage Money” The first problem
people face is that they have no idea how to manage their money?

Problem #2 - “No idea of NET WORTH and How to manage it” The second
problem is that people have no idea of their net worth. They know how much
money they want to have, but they have no idea of the amount they have.

Problem #3 - “Unable to comprehend Financial Reports.” Understanding the


Financial Reports is the most important for an investor and a trader. You must
know about the company, its functioning and its financials to become a
successful investor or a trader.

METHOD
In this section, we will try to find stocks to invest for the long term using filters.

These filters will automatically filter out the top 10 stocks from a list of more than 6000
stocks included in the BSE and NSE.

FILTERS
Now let’s take a look at each of the filters one by one and how to apply these filters to
select our stocks.
1) Go to screnner.in
2) Create an account there (it’s free)
3) Go to the top bar and click on the “+” tab. (Create new screen)
4) This is where we will enter our specific criteria to select stocks.
5) See below how to enter specific filters.

1. MARKET CAPITALIZATION
Market capitalization, commonly called a market cap, is the market value of a
publicly-traded company's outstanding shares.

Market capitalization is equal to the share price multiplied by the number of shares
outstanding.

*We prefer companies having at least 7000 crores of market capitalization.

*To apply this filter type in “query box” - Market Capitalization >7000 AND

2. SALES GROWTH
The amount by which the average sales volume of a company's products or services
has grown, typically from year to year.

*We prefer the sales growth to be more than 10% in the last 10 years.

*To apply this filter type in “query box” - Sales growth 10Years >10 AND
3. RETURN ON CAPITAL EMPLOYED (ROCE)
Return on capital employed (ROCE) is a financial ratio that measures a company's
profitability and the efficiency with which its capital is used.

In other words, the ratio measures how well a company is generating profits from its
capital.

*We prefer the average of ROCE to be more than 15% in the last 10 years. *To apply
this filter type in “query box” - Average return on capital employed 10Years >15 AND
4. PROMOTER HOLDING

Promoter holding signifies the percentage of shares that are held by the promoters of a
company. Promoters and promoter groups are entities that have a significant influence
on a company. They may have a major or even a controlling stake in the company and
may also hold senior executive positions.

If the promoter is increasing his stake, it shows his confidence in the company and
vice-versa.

*We prefer Promoter holding to be at least 30%.

*To apply this filter type in “query box” - Promoter holding >30 AND

5. RETURNS
Return simply means the loss or gain the share/security has generated over a period of
time.

It is the appreciation/depreciation of the share price over a period of time.

*We prefer returns to be more than 17% in the last 10 years. 17% is the average return
of nifty.
*To apply this filter type in “query box” - Return over 10years >17 AND.

*Don’t type “AND” in the last filter.

NOW RUN THE THIS QUERY


*After running this query, you will get a list of shares.

*Now we want to rank these shares according to its average ROCE in the past 10
years.

*In the results page, click on “ROCE 10 years average”


*After this, you will get the shares ranked according to its average ROCE in the past 10
years.

THIS IS OUR LIST OF TOP 10 STOCKS.


1. Page Industries
2. P & G Hygiene
3. TCS
4. Britannia Inds.
5. TATA Elxsi
6. Avanti Feeds
7. Asian Paints
8. Abbott India
9. Ajanta Pharma
10. Pidilite Inds.

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