Stock market is a game of outsmarting and competing with all the traders, Investors, and analysts who are there, it is a game where every second influences in deciding whether you are gainer or loser. It is a game of chess where every move that you make today influences your finances and life. So are you the smart one who is ready to win a game of chess? If yes then market is for you otherwise stay away and do not burn your hands. It is not a game for those who cannot devote time or those who do not understand the basics. Here are some pointers, which would be useful in picking fundamentally strong stocks for a period of five years.

Companies that have Market cap more than Rs 250 crores.

10% YOY growth for past 3 years in net sales.
10% YOY growth for past 3 years in net profit.
Profits or sales should not have decreased in previous two quarters.

Operating Profit margin should have grown steadily in last two years

Operating Cash Flow should have been flowing in last 3 years.
Other important ratios are Return on Equity, EPS, Cash EPS, and PE.

This entry was posted on Monday, October 27th, 2008 at 5:34 pm and is filed under Education. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.