How to find a multibagger stock

In today’s fast pace world we all wants to retire early with a hefty amount of money so that we can life our rest of our life in peace. So what’s the actual formula to do that ? Well, there are some parameters from which you can actually make that possible.

What are the key factors of a multibagger ?

1. Fundamentals

Yes, you have to watch out for fundamentals because this is the most basic thing to look out as it reduces the future default of the stock.

Now if we talk about the factors which affects the fundamentals of a company so those are :

Firstly balance sheet, yes you have to see for the assets and liabilities, secondly cash flow of the company and lastly income the most vital because if it is not profitable how we can invest in .

Secondly cash flow, well it make stock less defaulting because if a company has free cash flow or a reserve then it will always be eligible for paying off the uncertainties, now whether it has came through debt or any bad situation

Laslty see the income and revenue statement, well I have kept it at last because if a company doesn’t making any such income on which a lot of things depends, then how could someone invest in such kind of companies.

2. Return on equity

Return on equity is the advantage which you will get on capital employed. Your money should increase that is why it is crucial to think about the return your money will generate.

Formula for return on equity :

It should be greater than 20% because it will be only be going to make that stock a multibagger.

3. Net profit margin

The net profit margin, or simply net margin, measures how much net income or profit is generated as a percentage of revenue. It is the ratio of net profits to revenues for a company or business segment.

4. PE ratio

PE ratio is simply a calculation of how many years it will going to take for earning 1$ on your part of money.

A higher PE means company is overvalued and a lower PE means company is Undervalued, now PE should less than 20 than it will be good. But also the PE ratio your chosen stock should be less than the industry PE because it should be compatible with other peers of its industry also.

5. Sales and profit growth

The sales growth rate measures the rate at which a business is able to increase revenue from sales during a fixed period of time. It should be minimum 15%

At the end I would say you should also take a look on to the company’s uniqueness in the segment, what actually it is doing different from its peers.

Volatility ratio

It’s a ratio which is use to define price action or patterns and breakout. It is actually used by the intraday traders who predict the price action of a stock on the basis of Volatility, but if you are a long term investor who doesn’t care about one particular day price then you should not care about it because you are trusting the fundamentals and potential growth of the company.

Volatility Ratio Formula

It is calculated by dividing the implied volatility of an stock by the historical volatility of that stock. A ratio of 1.0 means that the price is fair. A ratio of 1.3 implies that the option is most likely overpriced, and is selling at a price that is 30% higher than its real value.

HOW IT WORKS ?

It came to work when you are purchasing a high volume stock because there will more volatility. As you will see a lots of ups and downs.

Like you can see in the above stock it is volatile wholly. These stocks are being speculated by a lots of insiders. As they all basically use pump and dump stratergy to manipulate stocks, so that they can earn some amount of profit on a daily basis. It could happen only with high risky companies which have lost market share or one which is overhyped or overvalued. They are like cryptos only as it also fluctuates a lot in a day.

NOW WHAT TO DO WITH THESE KIND OF STOCKS ?

Well, this question is obvious because everyone wants to make profit out of everything wether it is risky or not, avoid taking entry into these kind of stocks until and unless you know the business or you see some potential in that stock for future because that will be going to be a complete different thing.

12 habits that you should have in your 20s

Introduction

Today I will going to discuss a very important consideration which you should always keep in yourself. Those are habits! Habits are one of the most important aspect of our life where we all always lack, they are tools which you can use for winning other people in some situation and you would definitely see a tremendous change in your life if you make one powerful habit.

They can take so much far in your life because if you make goals or target they also need some discipline. For example if you promise yourself to read one book every month and that is the goal and target, Now it is possible that you will feel tired by doing it for one month only, it’s because you don’t have habit of reading probably, but if you make a habit of reading everyday for 15 minutes then you will indulge more in it and ended up reading more books in a month, that’s what we called a power of a habit.

1. Call people by their name

Whenever you write an email or replying to the message you should call the person by their name as it creates an emotional bond, people got to know about your personality that you remember them and they feel familiar with the most familiar thing we have ‘our name’.

2. Write email to yourself to future

If you come across something that you want to do, let’s say an idea came into my mind that I will going to learn this new skill but I know that’s it’s not the write time to do that to learn that, so i will draft an email for myself and set a schedule, maybe it could after six months. What you do by this is that you set yourself to milestone for your future. It is not a goal or target, it is reflection.

3. Do not try and remember everything

We waste our time in remembering up every single thing in our mind it should be in your notes or it should be documented. Our mind isn’t meant to remember things, it’s for doing things. So you have to spend your mind and energy in getting things done not in remembering things.

4. Wake up and smile at the mirror

Every day when you wake up in morning stand in front of the mirror and smile at yourself because if you will not love yourself then no one else will love you. If you won’t support yourself no one ever will and this smal habit will take you so far ahead.

5. Meet someone new every week

Meet someone whom you have never met, it could be a virtual interaction or a in-person interaction, it doesn’t matter. Because you would learn new things in every meet it could create so many opportunities without any planning

6. Read 30 minutes everyday

By reading books not only you are gaining knowledge but also you becoming more disciplined in life because as every time you read a new text it generates curiosity in your mind to read more and cycle goes on and on.

7. Say ‘Thank you’ even if they are not listening to you

Having gratitude or being grateful is a very important skill of life. We often start taking people for granted, when people do something for us, we often tell ourselves ‘This was normal’ anybody could do that but that is how you should not live life.

You have to create a habit as soon as possible that I will have to acknowledge every person who does something for me.

8. Don’t leave inspiration on chance

You will have to form a habit where you are not dependent on luck to be inspired. Get an inspiration from inside, it should not be unfortunate. You will have to do something everyday in your life that inspire you, whether it’s a sport, or to do dance, or could be listening to the songs that leaves you high on energy because it’s your responsibility to inspire yourself

9. Invest every month

Must got aware of this point because you have to do it with whole dedication, amount doesn’t matter at all the thing which matters is the consistency. Don’t try to time market just whether conditions are drastic of economy, it will create a financial discipline in your life because you may not have to work after your 30s because power of compounding is something which you shouldn’t underestimate.

10. Know and learn numbers before emotions

A lot of decisions in life we take upon the emotions instead making them based on numbers. A perfect example of this is when we buy new car or any other luxury we always go with the price so that we could become cool or could look rich.

All these are emotions and ultimately they will influence our life, they play a very important role but if you starts with the emotions then you will not set the habit of thinking analytically.

11. Breath deeply

This one is quite simple because you just have to take long breath for at least 2 minutes thsi will reduce the pressure over the body.

12. Workout everyday

Lastly working out everyday because only you are maintaining your body but also you are making it a lifestyle. It gives you relief from a hectic day also maintains blood pressure and also prevents other diseases as well. You can do any type of workout in which you comfortable in it could zumba, hitt, weight lifting or running.

What if our shares got lost

Today’s topic is something which is called unsual because this happens always when stock exchange misplace your part of your share. That of lost money and shares, is well on its way to getting solved with the establishment of a digital process for recovering old dividends and shares by the ‘Investor Education and Protection Fund Authority’ (IEPFA).

Steps to be taken after this mishap.

Firstly report this issue to your respective depository service with your ISIN number mentioned in the application(that was given by your depository at the time when you have bought the share.They will going to report this matter with the company, now it’s company’s responsibility to find out whether your part of share were issued or not.

After that company will going to report this matter to the statutory body(SEBI) under which it comes.Also they will post an announcement lost of share certification with sebi.

Lastly you have to claim those share and after that they will show up in your demat account.

I think this was the most precise way anyone could have told.

Thank you

Dividend yield

Why is it important

Dividend yield is a ratio which is very important to make a decision for a company if you want regular income every quarter(4months) or to keep an eye on company’s profit flow.

Dividend Yield Percentile

Meanwhile the average dividend yield to be expected by a company is about 2% , now whether it belongs to any industry.

To be more precise according to the different sectors:

Healthcare : 2.5%

Material : 5.0%

Industry : 5.0%

Financial : 4.5%

Technology : 3.5%

Service : 2.5%

Utility : 4.0 %

Formula to calculate yield

Dividend per share/ Market share of a company

Suppose if a company x’s stock is trading at a price of rs1400 or 20$ roughly and giving a dividend of rs 100 or 1.5$ per share then the would be 6% .

Also, You have to keep one thing in mind that you have to calculate the whole dividends which are given throughout the year , like if a company has given 100rs dividend in the first quarter of the year and then after that it has given like 100,120,80 in the remaining quarters, eventually it will become rs 400 dividend throughout the year.

In the case of company x we have rs 400 or 5.4$ dividend then : 400/1400 =0.28 which 28% dividend .

How to find out if market is Overvalued

1. First factor here is the P/E ratio : P/E ratio is a important factor to check whether the market is overvalued or not.

P/E = Share price / Earning per share

If the PE ratio is higher , then its a signal of Overvalued markets . You can also check the past 15 year performance of market to analyze the all time high or the low .

2. Secondly you’ve to check dividend yield however it also indicate that something is profitable or not but we can also use this factor to identify whether market is overvalued or not .

Dividend Yield = Dividend Per Share/Current Market Price

High dividend yield is a thing,who is telling about that market is Undervalued and its a good time to consider a stock and if low dividend yield is there then market is overvalued.

3. Third and the most important factor is market capital to GDP , GDP is a very most important thing for a country because it defines the whole performance of the country and also it tell you about how developed the country is . If you compare these two things at a time then it will tell you all things in a nut shell.

Market Capital to GDP = Market Capital(All listed Companies)/GDP

It is also called as Warren Buffet’s indicator

When the total Market Capital is greater than GDP then the market is overvalued and if the Market Capital is lower than GDP then the market is undervalued .

4. Fourth and the last indicator is Beer Ratio , it is an indicator which will tell you about the amount of risk present in market because it compares govt. Bond yield with earning yield of stock market .

Beer ratio = Govt. Bond Yield / Earnings Yield of stock market

Earning yield = Earning Per Share / Market Price of share × 100

Earning yield shows that if you invest a particular amount in a company then what amount you will be getting in return

If government bond yield is lesser than earning yield of stock market then the stock market then the market is Undervalued and if this not the case then the market is overvalued

I recommend you to not take any investment decisions on basis of these indicator , Because I am just sharing my knowledge to enhance yours knowledge.

Introduction

If you are young and in your twenties so this is a good time to take risk and make mistakes as in this phase you people don’t have enough responsibilities as it will be in future .

▁Investment is basically a process of creating wealth for future and also you could create money in short term, it depends on the purpose of investing because this world is so vast.

How it actually works

Investing your hard-earned money in assets, which can generate enough returns to sustain through your retired life is very important. Investing is a life long affair and one has to devise an efficient plan to save and invest throughout the working years.

Before we understand why one should invest, let us figure out what happens if we choose not to invest.

Assume you earn 50K per month, of which, you spend 30K towards the cost of living, and therefore left with 20K in surplus every month. You choose not to invest this monthly surplus and leave that cash as-is. Now, the question is, at this rate, how much money will you have by the time you retire? For the sake of simplicity, let us ignore the effect of tax and make a few simple assumptions .

• Your employer is kind enough to give you a 10% salary hike every year

• The cost of living increases by 8% year on year

• You are 30 years old (now) and plan to retire at the age of 50, this implies you have 20 working years left

• You don’t intend to work

• Your expenses are fixed and don’t foresee any other expense

• The balance cash of 20K per month is retained in the form of cash, probably in your bank’s savings account

Take some time, maybe get a pen and paper and do the math. At this rate, can you work out the amount of money you would be left with by the time you retire?

Okay let me show you some simple maths

Calculations

Here is the math –

• 1st year you earn Rs.600,000/- i.e Rs.50,000 per month 12 months

• Your yearly expenses are Rs.360,000/ i.e Rs.30,000 per month 12 months

• Your yearly savings is Rs.240,000/- i.e Rs.20,000 per month 12 months *

• The 2nd year, you get a hike of 10%, so you earn Rs.660,000.

• The expenses increases by 8%, so do the retained cash.

• So on and so forth

The numbers are quite scary and here is why _

• After 20 years of hard work you accumulate 1.7 Crore

• Expenses are fixed, your lifestyle has not changed over the years, you probably even suppressed your lifelong aspirations – better home, a better car, international vacations etc

• Post-retirement, assuming the expenses will continue to grow at 8%, 1.7Crs is good enough to sail you through roughly 8 years of post-retirement life. 8th year onwards you are likely in a very tight spot with literally no savings left to back you up.

What would you do after you run out of all the money in 8 years’ time? How do you fund your life? Is there a way to ensure that you collect a larger sum at the end of 20 years?

Higher the risk is ,the higher the returns will be .