How To Find Undervalued Stocks! Value Investing using Stock Screener [PEG Ratio - 2021] - YouTube

In this video I ll be sharing wih you a formula

with the help of which you will be able to identify or shortlist in 30 seconds

those companies shares which are perfect for investment at the moment

It is very important to purchase the right company at the right price

We have to identify these undervalued companies

I call this technique as SHARP technique : Shares available at the Right Prices

There are more than 5000 Companies and it is impossible to study all the companies

but with this technique we can reduce the number from 5000 to approx 20 companies

so guys do watch the video till the end

so Lets Start

Will you buy Maruti 800 at Rs 10 Lakhs ??? The answer is NO

in same way there is a right price for Maruti Shares as well

which is called as Value Investing

For Value Investing there are some criteria

Criteria 1: We will ensure that we stick to Large & Mid Cap Shares

In Small Cap shares there is risk and also the availability of public data is low

To remain in Mid & Large Cap Shares we will apply Market Cap

Market Cap helps us to know how big is the company : 10,000 Cr 15,000 Cr

Generally Mid & Large Companies are above 5000 to 6000 Cr

Criteria 2: In any Business, Sales & Profit is very important

After Market Cap the most important criteria that we need to check

that the Sales & Profit are increasing constantly

On an average 3yrs Sales & Profit growth should be more than 7%

7% will be the bare minimum criteria that we need to keep to make our pool.

Criteria 3: We need to check the amount invested in the company in the form of debt or equity

That is the amount invested by the shareholders or investors like you and me are been utilised properly by the company.

For that we will first check Return on Capital Employed (ROCE)

which should be atleast 15%

Along with it we need to check its debt, which we we evaluate by Debt to Equity Ratio

which should be maximum 0.5. This is the cut off which means any number below this is better.

0.5 means on equity of Re 1, comapny has taken loan of 50 pasie

So it is important to chech the debt equity at the right amount.

Criteria 4: Valuation

One of the key parameter

For that we will explore Price to Earning Ratio first

By PE Ratio we mean what premium are you paying for Re.1 for Earnings (EPS)

So P/E of 20 means that I am ready to pay Rs.20 for Re.1 of earning

So how do we use it ?

Current P/E should be less than 1.5x Last 5 year Avg PE

This is one of my biggest thumb rules

PE shouldn't have been re-rated much on the higher side

Another effective ratio is PEG: PE/Growth

It compares PE Multiple with GRowth

Example, if PE=20 & Company grows by 20%, then PEG=20/20=1

PEG Ratio below or closer to 1 is desirable. However, cutoff for us is 2

How do we now apply these criteria's ?

For this we will website ->screener.in

Step1: Go to Screener.in

Through screener we can create different stock screens, by clicking on screens, which is STEP 2

Go to "Create New Screens"

Copy & Paste the formula shared in the "Top Comment" of this video and paste in the panel on screener.in

There is absolutely no need to remember the formula

Let's copy the formula

& Paste the formula to run the query

Now full list of ~22 undervalued companies is now ready

Out of 5000 the size has just reduced to 20

HCL Technolgies, GAIL, Aurobindo, NMDC, Coal India are some the examples

These companies now can be evaluated further

If you find this info useful, smash that Like button

Let's discuss the bonus segment now

In bonus let me share ready formula for "Best Dividend Shares"

Very recently we have made a video on "Best 3 Dividend Stock of 2021 ?"

I have pinned the formula on that video in comments

You can simply go to the video and copy the formula

Go to screener.in ->Screens->create new screen and paste to run

Full list of 25 Dividend paying stock screen is in front of you now

I will ensure to share the criteria whenever I create these screens

Do subscribe for these criteria and screens

We have done similar videos on "Best FMCG Stock" & "HDFC Bank Analysis", so do check them, you'll like it

Disclaimer: No one can guarantee return or safety in stock markets with any screens.

This video is for educational purpose only. Kindly consult your financial advisor before any investment decision

Do keep watching "StockAdda with Janak