Summary of "This Growth Investing Strategy Delivered 113% Returns Last Year | Ishmohit at @SOICfinance is a Fan😍"
The video discusses the GARP (Growth at a Reasonable Price) investing strategy, which combines elements of both growth and value investing. The presenter, Ishmohit, emphasizes the potential of GARP Investing, showcasing its effectiveness through various Stock Screeners that yielded impressive returns.
Main Financial Strategies and Market Analyses:
- GARP Investing:
- GARP stands for "Growth at a Reasonable Price," which seeks to find stocks that are undervalued based on their growth potential.
- It lies between value investing (focusing on undervalued stocks) and growth investing (focusing on future growth).
- The PEG (Price/Earnings to Growth) ratio is a key metric used in GARP Investing, where a lower PEG Ratio indicates undervaluation relative to growth.
Methodology and Step-by-Step Guide:
- Understanding Growth:
- Focus on companies with sustainable revenue growth rather than just earnings per share (EPS) growth.
- Prioritize revenue growth over EPS growth due to its predictability.
- Using the PEG Ratio:
- Additional Parameters:
- Maintain a debt ratio (total liabilities/total assets) below 25%.
- Look for companies with high promoter shareholding and strong economic moats for sustainability.
- Stock Screeners:
- First Screener: Market cap > ₹10,000 crores, PEG Ratio < 1, EPS growth > 20%. Resulted in 39 stocks with a one-year return of 113%.
- Second Screener: Focused on large companies with market cap > ₹50,000 crores, requiring quarterly sales growth of 15% and profit growth of 20%. Achieved a return of 110%.
- Third Screener: Based on a six-point criteria including market cap, revenue, and analyst coverage. This yielded 131 stocks with a one-year return of 51%.
- Fourth Screener: Based on S&P 500 GARP index methodology, incorporating financial leverage, return on equity, and earnings-to-price ratio.
- Custom GARP Framework:
- Establish minimum market cap and sales requirements.
- Utilize a PEG Ratio of 0-2.
- Set targets for sales and EPS growth of at least 15%.
- Resulted in a custom portfolio delivering a return of 115%.
Presenters/Sources:
- Ishmohit at @SOICfinance
- Reference to Peter Lynch and the S&P 500 GARP index.
Category
Business and Finance
