Here's How I Pick Best of The Best Stocks...And You Can Too!

Apurva Sheth

Last time I showed you how to invest in today's market by marrying fundamentals and technicals. Today, let's delve deeper and you will know how I do it.

More importantly, how you can benefit from it.

The process of picking stocks I'm going to share with you is formulated from having closely worked with institutions in the past, and tracking their success to generate money in challenging, difficult environments by trading in only the best fundamental stocks.

Some would trade only in sectors which were doing well. Some would trade only in the best 20 stocks of the Nifty 50 basket.

No matter what your trading style, everyone can use the techno-funda approach. After I joined Equitymaster in November 2014, I knew that the best available research out there is Equitymaster's fundamental research. I apply technical filters on stocks which the Equitymaster team has recommended.

That's how I created this process of picking stocks. And, here's how it works...

Three-Step Process to Identify Best Techno Funda Trading Opportunities

Step 1: Apply Qualitative Filters

I apply qualitative filters to build a universe of fundamentally strong stocks.

Then, I create a bucket of stocks chosen through the magnified lens of the Equitymaster Research team. This includes stocks from some of Equitymaster's premium stock recommendation services. There are seven services which track some of the best stocks across the length and breadth of Indian stock markets.

Each service is designed with a different objective and investment philosophy. But, one thing which is common across these services is that, their well-defined process has delivered solid results over the years. Here's a peek of what the services are all about...

  1. StockSelect - identifies safe blue-chip stocks that subscribers could count on over a long term. It is the longest running Equitymaster service with a successful track record of more than 15 years. At the moment, there are 20 open recommendations in this service.

  2. The India Letter - has zeroed in on 7 visible signals or Megatrends that it believes will be the key tailwinds for the economy. It recommends high growth stocks which could potentially generate market-beating returns over a long time frame. The team has identified 34 stocks which fits the criteria.

  3. Hidden Treasure - identifies small cap stocks with strong moats, good fundamentals, and solid managements that are available at attractive valuations. The stocks that qualify are recommended with a horizon of 3-5 years. The team uses a proprietary tool - Equitymaster Risk Matrix (ERMTM) for an objective and thorough risk analysis of these smallcap companies. Right now, there are 22 companies which have gone through the ERM™ and are live recommendations.

  4. Smart Money Secrets - tracks the investments of what they believe are India's 40+ Super Investors which includes exceptional Fund Managers, Investing Gurus and Promoters. Their aim is to get in early and then just "ride along" with these investing gurus towards solid profits. This is Equitymaster's latest stock recommendation service with six open recommendations.

  5. ValuePro - is a recommendation service based on the principles of Warren Buffett. The companies covered under the service boast of healthy moats, a robust financial track record, and good dividend payouts...the things Buffett looks at before buying any stock. The team has identified 30 companies which Buffett would buy.

  6. Microcap Millionaires - identifies stocks--where the downside to upside ratio is firmly in favour of the subscribers--that could lead to generating strong returns from fundamentally strong but attractively valued microcaps. The service which uses definite rule for buying as well as selling has 10 open recommendations now.

  7. Profit Velocity - is based on Newton's first law of motion which believes that stocks with high past returns tend to have high future returns. It aims to recommend mid and small cap stocks that have had the best returns over the last one year and are also blessed with strong fundamentals. This super active service has 14 open recommendations now.

    (Please note: I do not have access to Phase One Alert which is Equitymaster's exclusive recommendation service.)

    Equitymaster Services with Open Recommendations as on 1st November 2017

There are about 145 stock recommendations across all the above services. Some of them are common and recommended in two or more services...which is good as it means the stock has gone through two very different set of investment filters and processes.

Overall, there are 117 unique stocks which the Equitymaster team has recommended. These are live as I write this letter. I include all stocks that are recommended with an average liquidity criteria of Rs 5 million in my universe.

Step 2: Use Visual Chart Analysis

I apply technical analysis tools like trendlines, volumes, support and resistance, momentum to identify timely entry and exit points. I have written in detail about them and how I have used these tools alone successfully to identify some of the best stocks.

At this point, I will employ a combination of the fundamentals (stocks recommended by Equitymaster team) and technicals (my time tested proven system of trading) process to identify the best trades on the best stocks.

Step 3: Recommend Best Trades on Best Stocks

Finally, I will recommend stocks which pass both the filters with a maximum buy price along with target and stoploss percentages.

By now, I am sure you may be wondering how you can use the same approach...You may not be a subscriber to any of these services...or you might have only a few of them...or you may not know how to use the technical tools for trading.

You don't have to worry about any of this. We have a solution for you.

Just click here to know about it.

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2 Responses to "Here's How I Pick Best of The Best Stocks...And You Can Too!"
nilessh naik
09 Nov, 2017
i m a newly subsciber a m trying to understand your stetagies of investment.soit is too early to comments on your letters and other refferences. it is too lenthy and too unpridictable for me thanking youLike (1)
03 Nov, 2017
Very informative and useful. Thanks for wishes.Like (2)
We request your view! Post a comment on "Here's How I Pick Best of The Best Stocks...And You Can Too!". Click here!