Ratios I use to Scan stocks on Radar to identify strong Fundamental companies
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Below is the list of ratios that I use to identify fundamentally good companies. You can tweak the ratio figures as per your comfort and try as many permutations and combinations as you want, it is always fun to play around with scanners by tweaking the numbers. You can input the exact same query mentioned below to run a scan:
ROCE > 10 AND
ROE > 10 AND
D/E < 1 AND
Sales 3yr CAGR > 10 AND
Net Profit 3yr CAGR > 10 AND
Cash Conversion Cycle < Cash Conversion Cycle 5Yr Avg AND
FCF Yield > 0 AND
OPM > 10 AND
NPM > 6 AND
Dividend Yield > 0 -
Thank you
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Hi @Prasiddh-Shroff, one question
will the parameters not change with industry/ sectors?
asking because when for example chemical sector was down/ sideways for 2 years Auto Sector was trending, so even though the sector is down few companies will be doing well but may not hit the criteria but when the cycle changes they will charge and we will miss those stocks, am i wrong in this understanding? -
@ARUN MOHAN Hello, you've got it right. The parameters I mentioned earlier are meant to find companies that are already doing well. They can help us check their technical strength and maybe start trading with them. Just to clarify, these parameters are for finding companies that are already growing, not necessarily those that are undervalued.
So, companies that are still performing strongly even when their industry is down will meet these criteria. And the values that I have entered above are not rigid and rather are very lenient, so I don't think the companies will be missed out if they are performing despite industry in a downtrend
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hello @Prasiddh-Shroff sir build such scanner which shows red flags that will help to eliminate junk companies once this criteria is pass half work is done in that case people dosent looses much even if prices dosent rise or fall example like castrol since many years not generated any return but not loosesn its value
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@Nishshkumar Jaani Sir we have come up with a scoring based on Fundamentals, you can check the score of each company individually or can make a scanner query example - Perks Pitfalls Score > 70 which will show companies that score only above certain marking
Read more about the feature here - https://www.definedgesecurities.com/new-features/radar/
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Excellent Scanner @Prasiddh-Shroff . What is the period when the PP Score values are re calculated / updated ? ( I mean after what period ? )
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Dear @Deepak Patwardhan, we appreciate your feedback. The P&P score considers data from various timeframes, including daily, quarterly, and annual figures. You can check the score during each quarterly results season.
