1. Future Business Potential
2. High ROE and ROCE:
ROE is Return on Equity and ROCE is Return on Capital Employed
3. Earnings growth is the primary factor you should consider when screening for stocks.
4. Only if the balance sheet is strong, i.e. debt is less than, say 30% of the equity, then one can say that it is a genuine multi-bagger.
5. Quality OF Promoters:
6. Good Quaterly Performance: (Revenue/Ebitda)
7. Expansion or New Product development:
8. Good Performance History
9. Market leader:
The company should be market leader in whatever they are doing on a smaller scale and should be able to make that on a large scale over time.
10. Experience:
The management should have experience with the current business.
11. Look for strong sales growth since it would not be possible for a company to increase earnings consistently without growing its revenues.
12. Keep an eye on companies that have something new about them.
13. Look for source of earnings of the company: If you find that the potential to grow the business is huge in the segment where the company is operating, then it is better to take position now.
14. Business Opportunity Scalability and Sustainability.
15. EPS Growth Vs Valuation
16. Low PE Ratio
17. Search for stocks that are showing signs of accumulation i.e., big price advances on huge volumes.
18. Pay heed to how the overall market is doing. Stock markets can be highly volatile. And, 3 out of 4 stocks follow the general market and hence it does not make sense to invest into stocks during market downtrends.
19. Look for cues of capex, structural change from Quarterly presentations:
20. Business For a Cause:
Company that offers products and service that makes life better are quickly accepted by industry.
21. Market capitalization:
Small and Mid cap companies can show tremendous growth potential in terms of revenue and profit.
22. Share Holding Pattern:
23. Look For company which has following ratios:
Sales Growth more than 10 % (Past three Years)
Profit Growth more than 8% (Past three Years)
ROE more than 15% (Past 10 Years)
ROCE more than 15%( Past 10 Years)
D/E less than 0.5 (Lower the better)
CFO more than PAT (Same or Greater will be great)
24. Those companies which are growing at annual growth of atleast 20% CAGR then short list them all such companies. Like first of all see the management of the companies because if the management is investor friendly and transparent then you can always bet on such companies.
25. See the Promoters holding if the promoters hold near to 75% of share or accumulated the shares in short term then you can expect that they are working on betterment of the companies and buying the shares of companies in expectation of good profits.
26. High Growth Margin:
A high rate of return signifies the high growth environment of company.
27. Revenue Disproportionate Of Fixed Assets:
Initially they have high assets compare to turnover but later they may push towards generating revenue without increasing installation cost.
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