How to analyse stocks in not more than 2 hours

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Around 11 months ago, I started investing in stock market. When I first started out, my profit was flat.

But around four months ago, I figured out a process that has allowed me to grow my portfolio consistently—a process I could replicate. I am now at a point where I’m adding more and more excellently analysed stocks in my portfolio.

Best of all, I’ve been doing it without spending a rupee on any advisers, membership or whatever the high means to get hot stock tips in consideration of fees.

The tactics I’ve been using will work for anyone. They work so well that the results I’m experiencing with my portfolio stocks are even better and are likely to grow more by the time.

So, how did I analyse stocks, and how can you gain similar ones?

In this article, I’m going to provide you a clear insight on what great investors do that average investor fails to do. Read it and apply it, you will be able to do some pretty amazing things.

A money-making passive stocks portfolio is the dream of a lot of people. So why do so few people have trouble achieving this dream?

Because they don’t know the exact steps to follow.

I realize that some people who are reading this article are professionals at investing in stock market. You know how get more than average returns, and you might even be able to do so in few trading periods.

But others of us could use a little help.

And most of us need some tips on how to invest stock market, analyse a stock, and—very important—make money from that investment!

Stock market investing has come a long way in the past few years, and I want you to have the most detailed, most comprehensive, and most easy-to-follow guide on the entire Internet.

If you’ve wanted to beat the market averages, this is the article you’ve been waiting for.

Table of content:

  • How to analyse stocks with excellent past results
  • How to estimate the company’s future performance
  • Invest and Track your own made portfolio

Just follow them and see skyrocket returns from your portfolio.

How to analyse stocks with excellent past results.

A few years back, this step needed great effort but with the advent of many stock screener software, this process is not much cumbersome. On a single click, you can get more than enough stocks filtered according to your factors.

I use and also suggest others to use it. It is the only best stock filter for Indian Stocks.

Register and follow the step below on how to filter and analyse stocks with excellent history.

Before we proceed, let me introduce you to the structure of this web software.

How it works?

This software is designed for filtering stocks based on your priorities. That priority is known as “query”

There are already many queries on this website made by other users of the site and even you can make your own and share it publicly, otherwise keep it private.

You might be aware of the magic formula given by Joel Greenblatt in his book The Little Book That Still Beats the Market

This formula is also aired on this site:

Many other query/formula like the loss to profit, undervalued growth stocks, high ROE- low PE etc are also aired on this site.

So you’ve 2 ways to analyse stock:

  • Either follow other’s query
  • Or create your own query

I would suggest you to create your own query with your own priorities. Now let us understand how you can create a query.

  • Click on any quoted query and scroll down to bottom. You’ll see a query box which somewhat look like this…..

Here you had to type your query like return on equity, PE ratio, price earning, debt to equity etc.

For instance, I had typed the following factors that an excellent company should have.

Return on capital employed > 18 AND

Average return on equity 5Years > 16 AND

Price to Earning < 16 AND

Dividend Payout Ratio > 15 AND

Debt to equity < 2 AND

Profit growth 3 Years > 9 AND

Earnings yield > 12%

  • Type the above query and hit “run the query”

Note – Type “and” after every ratio if you don’t want them to show error (like I did above)

Here comes the 9 company considering above factors (I took randomly selected ratios for this illustration which might not filter excellent stocks so you choose your own criteria. Just don’t consider blindly following this ratio)

Now save the query by clicking “save the screen” green button located at right hand above the corner. A pop box will appear.

Name it. Describe it. Make it public or otherwise.

Kudos! You had just learned how to filter the stocks for analysing.

Now just find some excellent factors/ratios/factors and run the query.

And as the query is executed on the basis of past results so you’re all done with finding excellent stocks on the basis of past performance.

How to estimate the company’s future performance

This is where most of the investors lose their momentum. Future is something which has not yet happened. And predicting something (in an uncertain stock market) is not less than a terrible task.

Still, I came up with some promising parameters which might reduce the risk of investing to a great extent.

There are 2 things that I might consider following to understand company future.

  • Company’s sales and profit growth (element of micro economics)
  • Company’s and industry’s news (element of macro economics)

That’s how you can understand the micro and macro economic condition of the company which is the best way to predict the certainty of company’s future.

For micro element, I’ll look over company’s sales and profit growth

You can also get information on sales and profit growth on screener(dot)com itself. However, there are many other sites like moneycontrol, et times etc where you can access company’s past sales and profit metrics.

For instance, I’ll take an example of HCL Tech.

Sales of HCL is increasing year after year and that’s what this screener is saying:

You can also see the operating profit growth above. Other profits (EBIT, net profit etc are also showing a positive trend:

In percentage terms (TTM metrics are quite low):

Also considering comparing the company with its peer:

SO we can assume that company will keep giving positive returns year after year just as its financial statements are showing.

For macro element, I’ll look over company and industry news, favoring policies etc.

Google news system will be the best tool to get best available news regarding any stock. However, you can also use moneycontrol, ET times for this purpose.

  • Search “hcl share price” on google and click on the news tab as shown in the image below.

  • Here you’ll get more than enough news results to understand “what going on with the company these days”.

From the above results, one might conclude that HCL prices are down due to Q4 results and investors are uncertain due to its EBIT margins.…..etc.

Scroll down and get more of the company.

Also, do one more thing which is the most crucial to stay updated with each and every activity of the company.

At the end of the page, you will see a button of “create alerts”.

Hit the button and associate it with your Gmail account.

Now, whenever something new happens with the company a mail will get delivered to you, updating you with the same.

It’s a great way to stay updated with specific news.

That’s the whole process to filter and analyse stocks from whole index and the good news is: It’ll not take more than couple of hours. I bet that the stocks choose from above steps will help you filter excellent stocks.

Track, Write & Learn

Track stocks and write down the criteria that made you invest in filtered stocks (this is a crucial step to gain a track over your portfolio)

Track your portfolio once in 3–4 days or at least, once a week and figure out the trends. However, it’ll be not meaningful to deduct conclusions from short term tracking but after a year your efforts will worth you high. A yearly portfolio can be used for deducing conclusions.

After a year, track down which stock outperformed the market and then figure out what made you invest in X, Y & Z stock. That’s the real treasure, now you know what factors should be weighted more for screening high returning stocks this year.

Again follow the above steps to filter and analyse stock past, present and future. But also stay updated with government reforms and policies. It directly affects the industry which in turn affect the stock. In short, you should also have a great knowledge of economy to reach a perfect conclusions.

Learn from the mistakes

No matter how successful investor you become but you can’t become perfect. Even The world’s greatest investor Warren Buffett sometimes make mistakes (Hint: a single retina scan of Berkshire Hathaway annual letters will swamp you with more than enough mistakes he did in his whole career).

But the real success is where you learned from mistakes. It’s not always that you need to do mistakes to learn from it instead learn from other. Well said:

One of my biggest mistake I’m was invested in Usher Agro and I’m still stuck to it. It’s a high debt company and gone down by more than half of its value. At times, it was performing well but high-interest charges are swallowing up its whole profits.

But no rush, overall return from my portfolio is still positive with great margins.

#2 BONUS) Be Consistent and Don’t end up selling shortly

If there’s one piece of advice I wish I could share with every investor, it’s this:

If you bought a stock by following above stocks then don’t end up selling shortly on your broker’s call or news or anything. Stay stuck to that stock at both, good and bad times.

Something just takes time. No matter how great the talent or efforts are but something just takes time: You can’t produce a baby in 1 month by getting 9 women pregnant.

Here’s the biggest problem.

I don’t have time to analyse stocks. One of the most common excuses I hear people say to me when I ask – “so why you don’t yourself analyse the market, why you don’t invest in stocks, why you don’t build a stock portfolio?” You have time, I have time, Warren Buffett has time, Rakesh Jhunjhunwala has time.

We all have time, and just to remind you, we all have 24 hours a day, no matter where you live, how much money you make or how successful you are, you have the same amount of time as everyone else. So how some people excel and some don’t?

They are determined and concentrated. You must come to peace with a fact that you can’t make more than average returns from doing what others are doing.

You EITHER follow your broker, adviser, well-wisher, whatever the name you call it OR you become capable of picking stocks by your own. Going both ways will end up having nothing.

There are many brokering firms suggesting stocks on the daily basis but I’m not able to figure out if their stock tips are so much effective then why are they operating brokering firm, instead they should open an investing firm and invest their own money.

Again the same advice, you can’t outrun the market averages by doing what others are doing.

Here’s the crux in few words: Following others, when it comes to stock market investing, is not what makes you rich, creating your own strategy and following it till you beat the market averages is what makes you rich, rich and rich.

You can read entire books on investing, dozens of blog posts, and implement half a dozen different investing strategies. But at the end of the day, you’d have gotten nothing important done.

The truth is, investing is fairly simple, in theory. Even if you have an overwhelming amount to do, the steps aren’t hard to figure out.

That’s all for now.

Now, what?

Just Wait And Watch Your Portfolio Grow year after year.

WAIT! Don’t leave. Leave a comment to share your own metrics to analyse stock in few words.

About Sowmay Jain 55 Articles
Hello! I’m from Hub of IT (ha!) Hyderabad, India. I work full-time from home, making a living from my blog and another dynamic medium from my investments. Like so many other people, I’m on my Plan B career. At the same time, I share ideas and techniques to help my readers in mastering stock market and overcoming losses.
  • Glad you liked it Deepak!

  • VJ

    Great info. Your articles are awesome.

  • praveen

    Interesting, logical and easy to understand articles. I started investing 3 years back, but i was just purchasing stocks which was available at less. Never tried to understand how it works and read balance sheet etc. Invested in some metal stocks like jindhal steel and metal forge where i lost more than 70%, however i made some good profit in other stocks. Now i read , learn ,analyze and invest in stocks.

    • Easy! I’m glad to hear it. Stay in touch.

  • Sreenvias

    You have become my fan dude 🙂

  • Sreenivas Doosa

    Great article. Dear Somay, do you have any idea what would be the ideal P/E ratio in logistics sector to enter. The current industry P/E is more than 40.

    • I’ve no idea. I’m not tracking this sector.

  • Great article. Can you suggest me some books on investment. I am also want invest in some mutual fund. What’s you suggestion on mutual fund ?

    Can you review following mutual funds . Its better to invest in these mutual funds.

    Birla Sun Life Frontline Equity Fund
    ICICI predentional Value Discovery fund
    Mirae Asset Emering Bludchip Fund
    AXIS Long term equity fund

    Please post some articles on google mutual funds.

    • Thanks, Virendra.
      I don’t have any idea of MF. I generally trade on equity and of course, I’ll post something related to MF too.

  • Yes! these are the basic ratios that every company should stand out. Also, consider Sales growth %. However, only relying on the above metrics would also be not appreciable.

  • NAveen Sharma

    This material will be very helpful for me to find out “diwali pataka” stocks. well done SOWMAY.

  • NAveen Sharma

    what do you think about GM breweries & Jamna auto ? recently i purchased GM@457 (100share) & jamna@193 (150share). should i hold more ? awaiting for reply.

  • Santosh

    Sowmay – I read on your blog somewhere that you were able to replace your full time income from our stock investments. That’s great and dream of many people who are in jobs..Help me understand, when you say income, do you get monthly payments/dividends from these stocks or do you sell your positions monthly ? If someone wants to make stock investments his full time job, then how will his monthly income come – through monthly dividends (which I am not aware of) or by selling some positions monthly?

    • For monthly dividend income, you need a high amount of funds invested in high dividend paying stocks because generally dividend yield just varies between 1% to 3%.
      And positional profits doesn’t guarantee monthly payouts.
      SO don’t seek for monthly payouts from the stock market. It’s a long-term benefit source.
      And also let me know where I wrote that one can earn a monthly livelihood from the stock market.

  • Thanks and well said.

  • Chirag Parsana

    Hey sowmay….u hv displayed how to filter serch according to our customised parameters on one stock website. eg. Devidend, p/e, wherever we want!!! I forgot that site name plz tell me again..