Mining Precious Gems
Page 3
growth (compounding) in Profits and Sales over various periods - distant
past and recently.
Profit growth >10 AND
Profit growth 3Years >10 AND
Profit growth 5Years >10 AND
Profit growth 7Years >10 AND
Profit growth 10Years >10 AND
YOY Quarterly profit growth >10 AND
Sales growth >10 AND
Sales growth 3Years >10 AND
Sales growth 5Years >10 AND
Sales growth 7Years >10 AND
Sales growth 10Years >10 AND
YOY Quarterly sales growth >10 AND
QoQ Sales > 10 AND
QoQ Profits > 10
Highlights: This screen uses a minimum 10% quantification yardstick on
Yearly and Quarterly Profits and Sales to screen for suitable stocks.
4) Sales/Profit Growth compounding over a decade
Summary: Identify companies that are serious and established Profit and
Sales growth compounders over a longer term.
Profit growth > Profit growth 3Years AND
Profit growth 3Years > Profit growth 5Years AND
Profit growth 5Years > Profit growth 7Years AND
Profit growth 7Years > Profit growth 10Years AND
Sales growth > Sales growth 3Years AND
Sales growth 3Years > Sales growth 5Years AND
Sales growth 5Years > Sales growth 7Years AND
Sales growth 7Years > Sales growth 10Years
Alternate:
Profit growth > Profit growth 3Years AND
Profit growth 3Years > Profit growth 5Years AND
Profit growth 5Years > Profit growth 7Years AND
Profit growth 7Years > Profit growth 10Years AND
Sales growth > Sales growth 3Years AND
Sales growth 3Years > Sales growth 5Years AND
Sales growth 5Years > Sales growth 7Years AND
Sales growth 7Years > Sales growth 10Years AND
QoQ Sales > 0 AND
QoQ Profits > 0 AND
YOY Quarterly sales growth > 0 AND
YOY Quarterly profit growth > 0
Highlights:
This screen uses a comparison logic with Sales and Profit
growth to identify companies that are long term compounders historical y.
5) Growth stocks in recent timeframe!
Summary: Identify companies that have turned up eyebal s in recent
time-frame. This attempts to exploit human ‘recency bias’ where we tend
to remember or place more emphasis on near-term vs distant past for our
decisions.
Sales growth > Sales growth 3Years AND
Sales growth > 20 AND
Profit growth > Profit growth 3Years AND
Profit growth > 20 AND
YOY Quarterly sales growth > 20 AND
YOY Quarterly profit growth > 20 AND
QoQ Sales > 20 AND
QoQ Profits > 20 AND
current price < 1.15 * Low price
Highlights:
This screen uses a comparison logic with Sales and Profit
growth in very recent time-frame to identify companies that could have
increased momentum focus in the market.
6) Growth in EPS and Quarterly Sales/Profits in recent times
Summary: Identify c
ompanies t hat h
ave t urned up g
ood g
rowth i n E
arnings
Per Share (EPS) along with Profit/Sales numbers
EPS latest quarter > 1.2 * EPS preceding year quarter AND
EPS latest quarter > 0 AND
EPS > EPS preceding year AND
EPS > 1.2 * EPS last year AND
YOY Quarterly profit growth > 25 AND
YOY Quarterly sales growth > 25 AND
QoQ Sales > 20 AND
QoQ Profits > 20 AND
Market Capitalization > 100
Highlights: This screen uses a comparison logic adding EPS logic to the
Sales and Profit g
rowth i n v
ery r
ecent time-frame t o identify c
ompanies t hat
could have increased momentum focus in the market.
7) EPS compounders
Summary: Identify companies that have very good Earnings Per Share
(EPS) growth (For many market participants and investors, EPS is the
real bottom-line for the shareholders, that market values)
EPS > 1.25 * EPS last year AND
EPS > 1.25* EPS preceding year AND
EPS latest quarter > 1.2 * EPS preceding quarter AND
EPS latest quarter > 1.2 * EPS preceding year quarter AND
Expected quarterly EPS > 1.2 * EPS latest quarter
Highlights:
This screen uses a comparison logic with EPS numbers to
identify companies that are growing wel on the EPS numbers they turn out.
8) Profit growing at n% (ex: 15%)
Summary: Identify steady profit growers in the market
Profit growth >15 AND
Profit growth 3Years >15 AND
Profit growth 5Years >15 AND
Profit growth 7Years > 15 AND
Profit growth 10Years > 15 AND
YOY Quarterly profit growth > 15 AND
QoQ Profits > 15
Highlights:
This screen uses a comparison logic to identify companies
steadily growing and compounding their Profits at 15%
9) Constant and Steady market growers
Summary: Identify companies augmenting their OPM and NPM (ie Profit
margins) steadily. These are margin growers which should benefit their
bottom-lines for most part!
OPM > OPM last year AND
OPM > OPM preceding year AND
OPM 5Year > OPM 10Year AND
OPM latest quarter > OPM AND
OPM latest quarter > OPM preceding quarter AND
OPM latest quarter > OPM preceding year quarter AND
NPM latest quarter > NPM last year AND
NPM latest quarter > NPM preceding year AND
NPM latest quarter > NPM preceding quarter AND
NPM latest quarter > NPM preceding year quarter
Highlights:
This screen uses a comparison logic to identify companies
steadily growing and compounding their Margins over Years.
10) Comprehensive Profit/Sales numbers
Summary: Identify companies turning up very good raw numbers on Profit
and Sales
Net profit > Net Profit last year AND
Net profit > Net Profit preceding year AND
Net profit > Net profit preceding 12months AND
Net Profit latest quarter > Net Profit preceding quarter AND
Net Profit preceding quarter > Net profit 2quarters back AND
Net profit 2quarters back > Net profit 3quarters back AND
Net Profit latest quarter > Net Profit preceding year quarter AND
sales > Sales last year AND
Sales > Sales preceding year AND
Sales > Sales preceding 12months AND
Sales latest quarter > Sales preceding quarter AND
··
Sales preceding quarter > Sales 2quarters back AND
Sales 2quarters back > Sales 3quarters back AND
Sales latest quarter > Sales preceding year quarter AND
QoQ Profits > 1 AND
QoQ Sales > 1 AND
YOY Quarterly profit growth > 1 AND
YOY Quarterly sales growth > 1
Highlights:
This screen uses a comparison logic to identify companies
that are doing wel on their Profit and Sales account.
11) Focus on Quarterly result growers
Summary: Identify companies that have very good YoY and QoQ
Sales
/Profit/EPS numbers
QoQ Profits > 25 AND
QoQ Sales > 25 AND
YOY Quarterly profit growth > 25 AND
YOY Quarterly sales growth > 25 AND
EPS latest quarter / EPS preceding quarter > 1.25 AND
EPS latest quarter / EPS preceding year quarter > 1.25
Highlights:
This screen uses a comparison logic to identify companies
that are doing wel on their Quarterly numbers
12) Comprehensive Revenue/Sales compounders
Summary: Identify companies that have very comprehensive
Revenue/Sales numbers and growth.
Sales latest quarter > Sales preceding quarter AND
Sales preceding quarter > Sales 2quarters back AND
Sales 2quarters back > Sales 3quarters back AND
Sales > Sales last year AND
Sales preceding quarter > Sales preceding year quarter AND
sales growth > Sales growth 3Years AND
Sales growth 3Years > Sales growth 5Years AND
Sales growth 5Years > Sales growth 7Years AND
Sales growth 7Years > Sales growth 10Years
Highlights: This s
creen u
ses a
c
omparison logic t o i dentify c
ompanies t hat
are doing comprehensively wel on their Revenue growth and Sales
numbers.
13) Comprehensive Profit compounders
Summary: Identify companies that have very comprehensive Profit numbers and
growth.
Net profit > Net Profit last year AND
Net profit last year > Net Profit preceding year AND
Net Profit latest quarter > Net Profit preceding quarter AND
Net Profit preceding quarter > Net profit 2quarters back AND
Net profit 2quarters back > Net profit 3quarters back AND
Net Profit latest quarter > Net Profit preceding year quarter AND
Profit growth > Profit growth 3Years AND
Profit growth 3Years > Profit growth 5Years AND
Profit growth 5Years > Profit growth 7Years AND
Profit growth 7Years > Profit growth 10Years
Highlights: This s
creen u
ses a
c
omparison logic t o i dentify c
ompanies t hat
are doing comprehensively wel on their Profit growth and Profit numbers
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Value and/or Ratio oriented screens
These s
creens p
rimarily look f or ‘ value’ -
t hat is s
tocks quoting a
t classical y
reasonable to low valuations.
The value could come in terms of
parameters like Price-to-Earnings (PE) and/or PE to Growth ratio (PEG)
and/or Price to Sales (P2S) or could come out of attractive combination of
Fundamental ratios like Return On Earning (ROE) or Return on Capital
Employed (ROCE) et al.
Since markets are cyclical in nature - due to human emotions and market
psychology, good stocks tend to get b
eaten d
own i nto a
ttractive v
aluations.
With Price that discounts their potential in one or many directions and
parameters. This could be used as an opportunity f or medium t o l ong t erm
investing, buying stocks in discount and waiting for market to re-discover
them and rising them back t o t heir glory. This c
an b
e t he v
ery core t enet o
f
the oft overused term - ‘ Value Investing’
----------------------------------------------------------------------------------------------------
1) Classical Value based on key Fundamental Return Ratios
Summary: Identify companies that stand out wel from a classic key
fundamental return ratio perspective (ie. latest ROE/ROCE/ROIC/ROA
perspective)
Return on equity > 20 AND
Return on assets > 20 AND
Return on capital employed > 20 AND
Return on invested capital > 20 AND
CROIC > 20 AND
EVEBITDA < 10
Highlights: This s
creen u
ses a
c
omparison logic t o i dentify c
ompanies t hat
are above 20 in their latest key Fundamental Return Ratios. Then uses
EVEBITDA (Enterprise Value/ Earnings Before Interest, Tax, Depreciation,
Amortization) to cut down the list to get those with deeper value.
2) ROE gems
Summary: Identify companies that stand out from latest and historical
averages perspective for the key Fundamental parameter - Return On
Equity (ROE)
Average return on equity 10Years > 15 AND
Average return on equity 7Years >15 AND
Average return on equity 5Years >15 AND
Return on equity 5years growth > 15 AND
Average return on equity 3Years >20 AND
Return on equity > 20
Highlights: This s
creen u
ses a
c
omparison logic t o i dentify c
ompanies t hat
above 15 on their ROE multi-year averages.
3) ROCE gems
Summary: Identify companies that stand out from latest and historical
averages perspective for the key Fundamental parameter - Return On
Capital Employed (ROCE)
Average return on capital employed 10Years > 20 AND
Average return on capital employed 7Years > 20 AND
Average return on capital employed 5Years > 20 AND
Average return on capital employed 3Years > 25 AND
Return on capital employed >25
Highlights: This s
creen u
ses a
c
omparison logic t o i dentify c
ompanies t hat
above 20 on their ROCE multi-year averages.
4) ROIC gems with good Earnings Yield value
Summary: Identify companies that h
ave m
ore t han 2
5 o
n the F
undamental
parameter - Return On Invested Capital (ROIC).
Return on invested capital > 25 AND
CROIC > 25 AND
Earnings yield > 15
Highlights: This s
creen u
ses a
c
omparison logic t o i dentify c
ompanies t hat
above 25 on their ROIC and tones down the list by asking for an Earnings
Yield of greater than 15.
5) Classic Value Investing Ratio Picks
Summary: Identify companies are within bounds of common accepted
Value Investing Fundamental parameters
Price to Earning < 15 AND
Price to Sales < 1 AND
Price to book value < 1.5 AND
PEG Ratio < 1 AND
EVEBITDA < 10 AND
Earnings yield > 15
Highlights: This s
creen u
ses a
c
omparison logic t o i dentify c
ompanies t hat
fit into Classic Value Investing criteria using P/E, P/S, P/BV, PEG,
EVEBITDA and EY
Growth At Reasonable Value /
Growth With Attractive Ratios
Thus far, we have looked at how to dig up growth s
tocks a
nd v
alu
e stocks.
But can there be a fusion of the two paradigms. Growth at reasonable
price and value ?
Wel , that’s what this section is al about.
These screens look for ‘Growth at Reasonable P
rice’ (GARP) or ‘ Growth a
t
Reasonable Value’ (GARV) type stocks that could be a ‘win-win’ option in