Not everybody likes investing in small-cap stocks. Why? A general feeling about small-cap stocks is that they tend to default on their creditors and investors. But it is an excessive generalization of the fact. However, it is also true that it is more likely to find badly managed companies among the group of small-cap stocks….
We’ve built an Excel-based tool that can analyze stocks. But how beginners can calculate the intrinsic value in excel on their own? In this article, I’ll discuss a procedure to do it. It is simple, and even beginners can practice it. There are limitations of estimating intrinsic value using this method. But experts say that using some valuation method is better than investing blindly…
Before we get into index investing, we must know about the stock index. An index highlights changes in the collective value of a group of stocks over time. It is an indicator that highlights the performance of the entire market or a specific portion of the market (sector, theme). If there is a group of stocks, like a portfolio, the price of its components is…
Since my early days of involvement in the stock market, I was intrigued by the number called Sensex (A BSE Index). I always wanted to know how Sensex is calculated. What is fascinating about Sensex is that, when it is rising or falling, almost all stocks (mainly good ones) seems to follow its trend. I started investing…
Here is the concept of self-financeable growth. I first read about it on Harvard Business Review (HBR). The write-up was interesting. Hence I thought to write about it, in my words, for my readers. How I landed up on HBR? Recently Indian stock market is buzzing with IPO’s. Most of the IPO’s attracted the attention of…
Companies need cash to run their day-to-day operations. Working capital management focuses on factors that generate and consumes cash. A company must be capable of generating more cash than it consumes. Cash parked in the company’s bank account is not working capital. We will dig deeper to get a better understanding of the concept of working capital. What Is…
Talking about stocks, investing only in a financially healthy company is advisable. But it is easier said than done. Why? Because analyzing the financial health of a company is not easy for a novice? It is a thing that must be learned. In this article, we will try to do just that. Generally speaking, investors…
Generally, for banks and lenders, the asset coverage ratio (ACR) is one way to check the loan-friendliness of the company. Investors can also use the concept of ACR to check two things about the company. First, they can check if the company is risky due to a high debt load. Second, they can also check the price…
People who know about value investing will be familiar with the term called “margin of safety”. Generally, people prefer to apply a rule of thumb when it comes to the margin of safety. A stock trading at two-third of its estimated intrinsic value can be said to be available at a good margin of safety….
The Capital Asset Pricing Model (CAPM) is a financial model used by experts to establish a relationship between risk and return from an asset. But a common stock investor can also utilize the CAPM model. We can use it to tune our return expectations from stocks. Generally, when we buy stocks, we do it with…
It will not be wrong to say that Philip Fisher was one of the first influencers who promoted the concept of fundamental analysis of companies. He also wrote a book called Common Stocks and Uncommon Profits way back in 1957. But the book is as relevant today as it was ground-breaking during its first publication. The focus…
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Knowledge about how to build a stock portfolio is perhaps as essential as the stock analysis itself. Though the former looks more daunting to me. There are processes and financial models (like DCF) in place, using which one can analyze a business. But when it comes to stock portfolio building, there is no established process. A portfolio that might look apt…
