In laymen’s terms: Before buying a stock 99.

99% people see its current market price which

actually should be considered as last thing while evaluating the stock.

Why warren reads 5 hours a day about the company before he owns it. There is no big deal
reading the annual report of the company in which you want to invest after all its your
money would be invested in another’s persons venture. Before considering the bottom line
(net profit ) one should consider it from top line ( revenues ).

I mean while analyzing the annual report don’t jump to bottom line as company’s Net
Income but start with the Top Line

Revenues
Then come to Gross Profit = Rev-COGS
Then EBITDA = GP - SG&A
Then EBIT followed by PAT and then come to Net profit.

To evaluate a company stock price you need to know about its book value, dividend yield
with value of the dividend, debt, free cash flows and somewhere reserves which the
company holds for future events.

There are certain aspects that Warren revealed in many of his interviews, articles that some
of the major points that one should see before buying the stocks are as follows:

1. Company should be debt free or considerable amount of is acceptable

2. Valuation should be cheap : Suppose stock ‘A’ is trading 15 times of its FY17
earnings and an another stock ‘B’ of same sector which is trading at 17 times of its
FY17 earnings so prefer ‘A’ because its PE would be less than or equal to its
industry PE. ( PE is price to earning ratio that defines how much to ready to pay
for every one rupee you earn from the particular stock )
3. Free cash value (cash that a company is able to generate after spending the
money required to maintain or expand its asset base.)
4. Reserves (Reserves are amounts that are retained in the business and not
distributed to the owners. Stockholders' equity, except for basic share capital, is
referred to as reserves.)
5. Company’s future plans (being or coming hereafter future events like merger
talks, raising money through debentures or acquisitions).
6. Quick ratio (Capability to pay its short term debts).
If you are ready with your table and chair finally decided to analyse a company on your own
because you are planning to buy its stock then along with fundamental aspects like PE, BV,
ROE, ROCE, DE, Financial ratios one should consider the charts to analyse its short/long
term trend in which one of them is MACD.

Moving average convergence divergence (MACD) is a trend-following momentum indicator

that shows the relationship between two moving averages of prices. The MACD is calculated
by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA which
resembles with signal line which is 9-day exponential moving average (EMA) of the stock.

I have drawn it for TCS

Some of the people who fail to analyse stocks in proper manner end up saying
 ‘You can never predict the stock prices’. There are millions of traders/Investors are sitting
tight and discovering and finding our new ways to analyse market movements and
fortunately it works.

Thanks.

In early 1960s a British-born American investor and economist discovered a magic formula,
a formula that can quickly give best undervalued stocks to buy every single time.

Fair value is nothing but actual value of the stock. 

If this Fair Value > Current Market Price then stock is Undervalued
If this Fair Value < Current Market Price then stock is Overvalued
[ You can use 10Y GSEC in place of Current yield on 20 year AAA bonds]

This formula is called ‘Graham’s formula’ and it was made my Warren Buffett’s only

guru Benjamin Graham.
1. arunthestocksguru.com
Helps you understand how to think about a company and has recommendations as well.

2. paulasset.com
Articles on finance are really nice.

3. screener.in
Good for financial data especially if you want to do analysis in excel and screen stocks based
on specific criteria.

4. ValuePickr Forum
Great forum for discussion and getting feedback on your portfolio and stock picks. I would
say for beginners, this is a great place to spend time and read through ...

5. VALUE PICK FROM INDIAN STOCK MARKETS

Suggested in the comments section below, personally have been following this blog for only
a couple of months.