User Question Answered: How do you find a good stock for value investing? I mean what factors attract you to analyse the stock and invest in it for a long term perspective.
In Ask me Anything Kalpesh asked few of interesting questions and one of them was
How do you find a good stock for value investing? I mean what factors attract you to analyse the stock and invest in it for a long term perspective.
I don’t find stock myself but it is my brokers who suggest me stocks. Once I get the stock it goes into my list of interesting stocks.
Once I have the list of interesting stocks I do some basic fundamentals of the company like market cap, type of business and sector, quarterly earnings, management background …. If I see things are in favour of the stock, the stock moves from interesting list of stock to good list of stocks.
Now on the list of good stocks I apply technical’s to find the support and resistance for the stock and see where I should be getting into the stock and what should be my stop loss. In my eBook on Technical Analysis I have explained how to select the right stock at the right TIME and at the right PRICE.
For investment I prefer to get into stock which has good fundamentals but very good technical’s because according to me market movement is based more on sentiments and technicals depicts the sentiments more than fundamentals. So I prefer technical’s slightly more over fundamentals.
Have more questions? Ask them in the comments below. I will be more than happy to answer them all.
Hi Shabbir,
I have purchased few stocks like Tatasteel, DLF, Hind Oil & others.
15 months ago I bought Tatasteel for 690 Rs & DLF for about 260 & Hind Oil for 200 Rs.
Now the market rate Tatasteel around 355 Rs & DLF 196 Hind Oil 95 Rs
Can we expect rise in the above stocks ?
Kindly advise what should I do ?
Best Regards,
Alam
I don’t think so and the best way forward is to learn the art of investing and trading. You are the best judge for your investment.
Hi Shabbir,
The above article is very useful. I have couple of questions about deciding the right price & right time for a stock for investment.
1. In case the stock hits a 52 week low or all time low or conversely 52 week high or all time high, how should one find out the support & resistance levels for that stock? Is Fibonacci analysis useful for this case?
2. What should be the stop loss level in these particular cases?
Hi Abhijit, stock never move in a straight line. Now for stocks moving higher, you cannot have a resistance and you can use 2 options. Either opt for a trailing stop loss or go for a target of 3-4 times your stop loss difference.
For stock going down I never go about investing in them and if possible I try shorting them in peaks for a crack down.
Hi Shabbir,
Following are details of Canara Bank from Rediff money.
PE ratio 5.65 11/07/11
EPS (Rs) 90.88 Mar, 11
Sales (Rs crore) 6,417.76 Mar, 11
Face Value (Rs) 10
Net profit margin (%) 15.65 Mar, 11
Last dividend (%) 110 05/05/11
Return on average equity 22.43 Mar, 11
From these figures, does the stock qualify for a good buy at CMP. Can we use these details for finding value investments ?
Please excuse if you do not wish to comment on these sort of queries. 🙂
Thanks..
Naveen
Naveen, I don’t prefer investing in banks in high inflation scenario and I not only look into fundamentals but more on technical. Study the technicals for this stock as well.
wow its very nice knowledgeable information, you are doing great job.
keep it up Shabbir.
Great job done Very
Informative………
Thanks for the wonderful feedback Peter.