Fundamental Analysis For Beginners

Dear Friends,

If I were a tipster/stock advisor and wanted to begin this letter with a bold headline, I might begin it with--- 
"Free Intraday Tips, Multi-baggers Recommendations, Power Calls, Super Commodity Calls, Get Guranteed Profits!"
But I'm not that. I'm a successful stock trader who wants to see others being successful in this field and my objective is not to give calls or to make you people dependent on me but I want to see each one of you as self made successful person and that's possible only when you start learning the stuff yourself .

Now lets start doing it right now I have a weekend assignment for you people I am going to tell you people easy way to do fundamental analysis quickly, you are going to learn it and then search out some stocks which satisfy the conditions given by me and the one who gives the maximum number of stocks satisfying the conditions will be the winner, whose name will be acknowledged using another blog post, meanwhile you will be learning a lot by doing what I am going to tell you. So here I go............

As per the fundamentals section of our blog fundamental analysis is "the underlying forces that affect the well being of the economy, industry groups and the companies". Thats it, no need to get in depth of this thing lets move straightly to the point, following are the necessary things that you as a beginner will be looking for a company in order to call it a fundamentally good one. you will be using website or any other which you feel comfortable with in order to undertake this analysis:

1) PE Ratio: First of all look at the stock pe, on you will find it in the second row after searching for the stock, as Stock P/E- look at it and scroll down a little under peer comparison you will find industry P/E, if the P/E of the stock is less than the P/E of the industry then its great. Move to next condition. If its not satisfied throw it away and find some other which satisfies this condition 

2) Next Scroll down the website till Annual Result you will find compounded sales growth, compounded  profit growth and return on equity all of these are for you..............  proceed step by step the compounded sales growth, profit growth and return on equity of your share must be more than 12%. If the stock chosen by you satisfies this condition you have got a right one, If not kick it and look for another one till all above conditions are satisfied

3) And last but not the least is the debt to net profit ratio, it must be 3 or less, to calculate it divide net profit from annual results table form debt (secured loans+ unsecured loan) contained in the balance sheet you need to do this for at-least 4-5 years. If all the above conditons are satisfied by your scrip then you can comment it here, you can give as much as you can but each of your scip must be satisfying the given conditons. The one who gives maximum correct ones will be the winner.

These are not all it takes for fundamental analysis this is only a small part of it, but I want you people to start it, start it right now from this. Whenever you feel like putting your money in a stock check out these basic conditions if the stock satisfies it then you are having a fundamentally good stock. For more information you can check fundamentals section of our blog. Also I want to add here that fundamentals themselves are not the fulfilling conditions to buy a share technical view is important too, because at times you may find that a garbage scrip may be hitting upper circuit every other day while a fundamentally great scrip may be at the same place for months. In my view, fundamentals should be used to support technically good scrips i.e buying a fundamentally good scrip on technical gorunds. 

So if you are new to all this I would advice you to start learning technical analysis  through the straight forward and simple method given by me here on our blog right now click here to check out the learn 2 earn session of our blog to start learning the stuff yourself if you haven't started to learn it till now.

Also apply the easy fundamental analysis techniques to all stocks you are holding and checkout which one are great? If you find any satisfying all the conditons you can simply comment it here. Lets start being successful right now! Go for Great!

Abhishek Ninaniya
The Stock King

Tags: multibagger, multibagger stock ideas, multibagger stocks for 2015, multibagger stocks india, multibagger, multibagger penny stocks, Indian stock market chart, markets stocks, broker research reports, investment

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Write comments
November 1, 2014 at 3:54 PM delete

With due respect. Dear Abhishekji
Just give a thought Higher the PE then the Avg Industries , it is an Indication that
Now Company has started real journey towards PROGRESS. ?
Correct me if I am wrong. Just putting my view only.
With due regards

November 1, 2014 at 5:49 PM delete

PE Ratio simply indicates number of years that the present earnings of the company will take to cover the market price, thus a lower pe would be better because company will be covering it market price quickly, on the other hand higher PE indicates that the investors are expecting the earning to increase so they have already betted on the company, means buying a high PE company is moving after the crowd while investing in a low PE company is putting your money in a low PE company means you are investing in a hidden gem which is yet to be discovered by the crowd............... however other factors should also be taken care of while investing, PE ratio as alone can't be a fulfilling condition as to whether to invest or not in a particular scrip. Hope I was clear with it.Regards

umang dedhia
November 2, 2014 at 1:00 AM delete

Dear Abhishek,
Pls checkout Datamatics Global Services Ltd. as it fulfills all of the above mentioned conditions.
Also i feel it to be potential multibagger.
Pls correct me if i am wrong and also express your views on this company too.

November 2, 2014 at 7:57 AM delete

datamatics is already our reco given on 2nd setptember at a reco price of 68.45, for a target of 100, moved till 97 within a week of our call and then corrected a bit due to profit booking now its back in action............... also a good one from long term perspective

sharath rao
November 2, 2014 at 12:44 PM delete

Following are the companies:
arrow coated
vikram thermo
munjal shaw
suven life science
coral labs
abm knoledge
oriental carbon

which satisfies the above condition.


November 4, 2014 at 11:27 PM delete

HI Abhi...can u plz give sum stock example for calculating debt to net profit ratio mentioned in3rd point.Consider sintex for example

November 5, 2014 at 12:12 AM delete

For the year eneded march 2014, in sintex debt= (2373.84+1032.17)= 3406, net profit for the year is 373.56. Now devide debt by net profit= 9.11, which is more than 3, so sintex don' satisfy our condition. Also I want to state here that these are not full and final steps or thumb rules for fundamental analysis but i have given them as a quick and simple guide to be used by beginners for undertaking their own analysis at their levels. Regards and happy investing

November 5, 2014 at 10:32 PM delete

Thank you bhai :)

November 16, 2014 at 2:03 PM delete

Please check below scripts,

Gujarat Automotive Gears Ltd.
Pressman Advertising Ltd.
AVT Natural Products Ltd.
Coral India Finance & Housing Ltd.
Mahindra Holidays & Resorts India Ltd.
Exide Industries Ltd.
Odyssey Technologies Ltd.
Narmada Gelatines Ltd.
Trilogic Digital Media Ltd.
Gradiente Infotainment Ltd.
Vikram Thermo (India) Ltd.
Goodricke Group Ltd.
Continental Petroleums Ltd.
Poddar Pigments Ltd.
Vikas WSP Ltd.
Rapicut Carbides Ltd.
DHP India Ltd.
Dabur India Ltd.
Natural Capsules Ltd.