Money can work

Introducing Stock Score Card! At Money Can Work , we always strive to educate our users with the best possible content to help you grow your money. We are introducing a new Blog Series called #StockScoreCard , where we will try to share the fundamental analysis of an individual stock based on the five multibagger magic mantras which we earlier discussed in this blog. Five Multi-bagger Magic Mantras: Growth Story ( link ) Shareholding Pattern  ( link ) Debts  ( link ) Return on Equity  ( link ) Valuation  ( link ) Hopefully, #StockScoreCard helps you decide either to Buy/Sell a particular stock. Please share your feedback, insights and suggestions at our facebook / twitter page. Check out our first  #StockScoreCard  - Vakrangee ( link )! Stay tuned!

You should never buy every single great stock!!! Yes, you heard it right! Don't ever buy a company's only because it is a great business! Just like you shouldn’t buy the next best phone from Apple or Google if it costs a Million. Even if you can afford to buy, you would be a fool to buy at that price! Luckily, every day stock prices vary and you just have to wait for the right price which you think is right and then hit “BUY”! Price is something everyone knows, but what is it really worth? There is a magic trick to find just that! In fact, all-time-greatest investor Warren Buffett first looks at the business, comes up with a price in his mind and then looks at today's market price of that stock! Sounds crazy, but the technique is very simple and anyone can apply it. Guess the price of Non-Banking Stocks: Compute the sum of last 4 quarter's consolidated EPS Multiply with a P/E multiple which you think is appropriate based on the bu...

It is always good to see companies showing BIG profits! But, how much profit is good profit? Company A might do 10 crores of profit Company B might do 100 crores of profit This doesn’t always mean Company B is better than Company A More profits does not always mean a better company! Instead of looking at it in just absolute terms, what is more important is to look at in relative terms i.e., for every 100 rupee of shareholder's investment what is the profit that the company is making! Example: Let's say Company A and B reports net profit of INR 500 crores. In absolute terms, both companies are equal in terms of profitability. But in relative terms, Company A could be making 30 INR profits for every 100 INR investor’s equity. Company B could be making just 10 INR profits per 100 INR of equity. Return on Equity (RoE) of Company A is 30% but Company B is 10%. Hence, Company A is a better pick than Company B Return on Equity is a key metric in identifyi...

Debts (loans) are sometimes necessary to run a business, to acquire companies and for manufacturing capacity expansion. But, very high debts can literally kill a company! It is better to go to bed hungry, than to wake up in debt! Think about this, would you invest if Vijay Mallya started a new venture? Lol 😂 Stay away from companies whose debt/equity ratio is more than 1 In fact, I personally wouldn’t invest if debt/equity ratio is more than 0.5 Let's take an example of a company with good debt/equity Ratio : Maruti Suzuki ( link ) Now, let's take a bad example : Idea Cellular ( link )   Worst Case Scenario There are few companies with negative debt/equity ratios, like Suzlon ( link ). Stay away from such companies too! Negative debt/equity ratio means the company's net worth is negative. Very few bankers extend loans to such a company with a negative net worth unless there are extenuating circumstances, and there are assets th...

Shareholding pattern in simple words explains how much of the company's ownership is held by the promoters (Owners of the company) and how much is held by the public shareholders. Imagine a company where promoters (Owners) themselves are selling out their own stocks ! This is a BIG red signal! How can outside people be confident about the stock’s future if the promoters themselves are exiting the stock! On the other hand, if promoters are super-confident of the company’s future revenue and profits growth they themselves will buy more stakes from the open market . They are betting their own money on the company's growth! Imagine how confident they would be about the potential ahead of them! This is a BIG green Signal! A quick check can help you understand the shareholding patterns and make a decision. Here is a good shareholding pattern of a company - Maruti Suzuki ( link ) Here are the shares pledged (that can be sold by promoters any...

First and foremost you need a company which is growing for picking a multibagger! I know, this is a no brainer but there are thousands of people  investing in companies making huge losses year after year. They are hoping for a turnaround story, but never happens!  Example: Suzlon I would suggest you to stay away from such companies. You need stocks which are growing both in terms of revenue and in profits . Revenue and profits may not always dance together 😜 Case 1 : Many companies are growing both in terms of revenue and profits. This is the kind of companies you should look out for. Case 2 : Many companies are making losses in terms of both revenue and profits. I would suggest you stay away from such companies. Case 3: Few companies are growing in revenue, but profits are NOT growing, due to unnecessary expenses or higher raw material costs. Case 4: Few companies are growing in profits but revenue growth remaining stagnant. This sounds ver...

Ever wondered about the secret recipe of a great stock from Warren Buffett? Ever wondered what drives the stock price to grow steadily for years to become a multi-bagger? We hear all day stock suggestions from SMSs, TV and from apps/websites like MoneyControl and BloombergQuint. World around us has a lot of noise in terms of stock suggestions. Can you find a multi-bagger from this hell of suggestions? Can you decide if the stock suggested is a great stock or not? Here are 5 simple n easy mantras to find out just that:   The Growth Story ( link ) Shareholding Patterns ( link ) Debts, Loans and Mallya ( link ) Return on Equity ( link ) Valuations ( link ) This is a five-part series of blog posts, please check out for all 5 posts.