Many people ask me , how to find right time to buy a stock. How to find if a stock is cheap or expensive.
Making money in 2009 was not that difficult , almost all stocks ran along with markets , This is visible from the fact that most of mutual funds have gains in excess of 100% in last one year, not too difficult job for fund managers as long as they stayed invested in index stocks.
Last year, as the massive stock rally lifted all boats, everyone from the professionals to those who didn't have a clue (including monkeys) did quite well for themselves as long as they were invested in equities.
WHILE PRICE TO EARNING IS GOOD MEASURE FOR GROWING COMPANIES PRICE TO SALES CAN BE A GOOD INDICATOR
A STOCK WITH HIGH DIVIDEND IS USUALLY VER APPEALING UNFORTUNATELY ALL COMPANIES PAYYING HIGH DIVIDEND DOES NOT MEAN GOOF STOCKS.DIVIDEND FUNDAMENTALLY MEANS THAT COMPANY IS DISTRIBUTING ITSIT'S EARNING TO SHAREHOLDERS THAT MEANS DIVIDEND SHOULD COME FROM NET EARNING BUT SOMETIME COMPANIES FOOL INVESTORS BY BORROWING MONEY JUST TO PAY DIVIDEND
Stocks had a wild run for a while now. Traders and investors are overly optimistic again and this tells me that it's time to a think about a little contrarian approach. While the liquidity and credit crunch is over there are some fundamental issues in the market still exists
Market cap 6400 cr. Revenue of 2000 cr net profit 140 cr. Marico is highly overvalued at current level. Considering a growth of 15 % , company will earn 280 cr in 2011-12 to justify p/e of 25.
That tells me that expctations are high from this fmcg stock. I will not advice new position on this stock for short to medium term
The 5 Criteria for Picking Great Stocks
1. Valuation - Stocks with low valuations will outperform the market over the long haul. Therefore, we recommend companies trading with P/Es and Price to Book (P/B) multiples below their peers.
2. Management Effectiveness - We evaluate the fiscal health of the company, with a particular emphasis on how effectively it is managed. Our research shows that Return On Equity [ROE] is the best measure of this. So we seek out companies generating an ROE that is superior to their industry peers.