High ROIC GARP Cremes

Price is Slave of EARNINGS - jhunjhun Terry Smith - A high ROCE is better than low ROCE even if the valuations are double........Peter Lynch says high PE high growth (20 each) is better than low PE and low growth (10 each) and also price to BV is not a good indicator as assets and inventories can be incorrectly valued and cash per share is the floor of stock.......By Aswath Damodran...PE is driven by 4 major factors - high growth, High ROIC and thus low Reinvestment rate, low cost of capital WACC and low interest rates…..Lynch said high ROE and ROCE must be due to numerator and no deception from denominator…And lynch said buy cyclicals when PE is high and not when it is lowest (deception).....Damodran says I like companies with low PE, High growth, High RoE and low cost of equity and not just any low PE company...Look for companies with Mismatches...companies that should not trade it at these low PEs……R srinivasan, CIO of SbI mutual fund says make things simple and go easy on valuation if Roce and growth are high. afterall valuation is about growth and spread over cost of equity……..Sidhartha Bhaiya looks at Market cap to sales and buy at bottom even if PE look high. The pillar of multibaggers are - Valuation, future Growth and being contrarian..high profitability gives high PE multiples..diversify across sectors…do not buy high pe based on historical growth..crazy money printing by ben bernanke led us to move from Pe to high price to sales and inflation issues. i have finite capital. Till the time a stock does not come in our filters, I do not look at it. I just have to buy 15-20 stocks. We buy stocks on insider purchase, buybacks and sell on QIP, OFS, insider sell, IPO. Do as promoters do. I delay gratification and put capital for appreciation. Selling early is a mistake…..Dinshaw Irani says avoid pockets wherever you see frothy valuations without any earnings support and outlook…..Ashish Sommaiya says prices not moving should be visualized as a spring which will pop up eventually…..A multibagger does not require fund infusion as equity or debt from outside as the management is capable of generating high roic and roe…….Ashwath D says I waiteddd for Amazon from 97 to 2011 to buy. Investing is about buying stock at the right time at the right price and not just any price.................compare Banks ROE and PB ratio for Banksssssssssssssss………if RoE is lower than growth then company needs fund infusion. :((((((……..vikas khemani- valuation depends upon RoE, Growth and discount factor……discount factor has 2 components (risk free rate and risk premium) note that a small dip of 2prct in risk free rate will warrant a 35prct inc in valuations………..By Basant Maheshwari..a 5 prct interest rate deserves 20 PE and 2 prct deserves a 50 PE...my ceiling is 2 times PEG 😃….Samco owner Jimeet Modi averages up and not down unless it is a bear market fall…….Raamdeo Agarwal looks for less than 25 PE for 25 RoE and Growth prospects…….Keynes focussed more on valuation and said focus on those which are likely to be fancied by many which is called Castle in the Air theory while other theory is Firm foundation where a security or stock is bought below intrinsic value (learn secuirty analysis by graham dodds)….Res Tantum Valet Quantum vendi potest ( A thing is worth only when someone else will pay for it)……Regret will always be there in market…….Gautam Baid..great companies have a reason of why low PE, some overhang will awalys be there. After that overhang, PE rerating occurs..like after pledging is released, upwards rerating occurs…stock market takes its own sweet time to adjust post Breakout earnings which gives opportunities to enter.............................................crème de la crème - Identifying Coil Spring Stocks of strong revenue and hope of revenue in near term when markets are falling.....Gautam Baid A higher CCR (typically above 1.0x) is better than a lower CCR as it indicates a business is able to convert a majority of its earnings into cash. Companies may report high earnings, but they need to be converted to cash quickly to meet both short-term and long-term funding needs. A high CCR is often the result of efficient working capital management, such as fast inventory turnover, good receivables management, and favorable credit terms with suppliers. CCR helps measure how well a business is managing its operating working capital. The main difference between operating cash flow and EBITDA is operating working capital. Operating working capital focuses on the operating short-term assets and liabilities required to run a business’ operations. It is calculated as operating current assets (such as receivables and inventory) less operating current liabilities (such as payables). In general, operating cash flows should be higher than report profit as depreciation and amortisation are added back to net profit in the cash flow statement. Indeed, CFO/net profit was 1.5x for our global sample of 16,000 companies between 2010 and 2015. If CFO is significantly below net profit, it suggests the company is either becoming increasingly aggressive in profit recognition through a higher level of accruals or experiencing deterioration in terms of trade…….. MY CREAM - Joel Greenbalt looks at historical ttm data with today’s prices, buys a bargain and hopes that company may do well for substantial gains - This guy is kinda like me. he buys above average companies and below average prices Terry Smith - like Saurbah Mukherejee.. Roce, Cash conversion cycle, OPM, Gross Margin high with growth to show pricing power, Free cash flow yield, interest coverage well above 15x Ramdeo agarwal - spend 70 prct time in knowing the past of a company and pricing - on business today talk 2023 Earning DOES NOT drive stock price, FCF does. Change in FCF should be higher than change in profits and here PE is higher as it reflects FCF higher than profit growth. Astral poly 100x share as FCF has 100x in 10 years but profits is up 5x. Follow the cash and not the profit. Companie/They must reinvest this surplus cash flow from high ROCE for compounding, instead of giving dividends. Only then growth will come and hence consistent compounding. Only a punter looks at only PAT. HUL, Colgate, Hawkins, Castrol have High ROCE but low reinvestment, but in Asian paints, Titan, Pidilite, Nestle, reinvestment is at >50% (CAPITAL ALLOCATION) with good ROCE 20% growth. Hence they grow consistently. Here check Assets purchased % from Cash flow from operations to unravel investing. If FCF is going down, but FCF + Capex going up, then it is ok. Growing free cash flows are frequently a prelude to increased earnings. Companies that experience surging FCF—due to revenue growth, efficiency improvements, cost reductions, share buybacks, dividend distributions, or debt elimination—can reward investors tomorrow. That is why many in the investment community cherish FCF as a measure of value. When a firm's share price is low and free cash flow is on the rise, the odds are good that earnings and share value will soon be heading up. By contrast, shrinking FCF might signal that companies are unable to sustain earnings growth. An insufficient FCF for earnings growth can force companies to boost debt levels or not have the liquidity to stay in business. That being said, a shrinking FCF is not necessarily a bad thing, particularly if increasing capital expenditures are being used to invest in the growth of the company, which could increase revenues and profits in the future. Check how the extra cash is being used. Is it being invested in new related products or in buying Jets for promoters? :D Do you have pricing power?? Is the larger market infinite? PE is not helpful completely (specially in ISOLATION)... PE is a random multiple like a random walk (Random drunken monkey walk)..In coffee can investing book...today's PE does not decide your wealth creation If ROCE is very high..it attracts competitors and price war may begin..but Company's MOAT comes to rescue and still gives it a pricing power...keeping the ROCE high for that DIAMOND IN THE DUST….. Marcellus picks cheaper Price to FCF for highest ROCE and lowest debt Youtube quant talk. Technically FCF starts post RoCE of 25. Look for positive OCF

by Lakkshay