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You are here : IndiaNotes >> Market Action >> Fundamental

How I Identify stock for my personal investment

Namrata Shah | 23 Dec, 2015  | Follow Author | Add to my Favourites 
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We all desire to become millionaire.According to most of us, the easiest and fastest way to earn money is by investing in stocks recommended by our friends or relatives.


But, I follow different way to invest in equity. Let me take you through a simple way that I follow to identifying potential stocks that form part of my personal investment. I have started practicing this method after reading book by Peter Lynch - One upon Wall Street.


Few months ago, when Ganesh Festival was around the corner,I decided to get our house renovated before arrival of Lord Ganesha. So, with the thought of repainting - first name that I recalled was ‘‘Asian Paint''. This highlights strong brand recall that company has generated over the years.


In order to locate nearest dealer, I browsed through Asian paints website. I was amazed to see the range of services offered. So, instead of reaching out to nearest dealer, Idecided to call and fix appointment withAsian Paints consultancy and painting team.


The color consultancy team explained us:


- about range of products


- Guided us through color combination for different rooms that would provide positive, vibrant, and vivid atmosphere


- They were equipped with virtual tool that showed how the final wall finish will look like


After deciding layout, design and color scheme, next day came the team of professional painter arrived. They completed the repainting in hassle free manner with superior finish within the decided time frame.


Amazed by the service of Asian Paints Consultancy team and paint products, I decided to study Asian Paints - 'the Company' from stock investment perspective.


Later that day, I was riding my Activa for Ganesh Festival shopping.  As the signal turn red, I slowed down my speed to halt before stop line. After few minutes halt, my Activa refused to start. I was felt with the option of kick start.


So, my next stop was 2 wheeler service station. The mechanic checked fuel line, spark plug, battery and other components. Finally, he said that the problem is on account of poor functioning of battery and suggested that I should replace the battery.


I inquired with the dealer about range of batteries available for two wheelers.


He said Activa has inbuilt Amaron battery and replacing it with other Amaron battery would entitle me to discount - commonly known as replacement discount (customer retention tactics). I asked him about terms of warranty. He said that the battery comes with free replacement warranty of 24 months therafter pro-rata warranty for period of another 24 months. I got excited to know about discount and warranty. But, MRP of Amaron batteries was at 20% premium to batteries manufactured by competitors (pricing power).


Initially, I thought he was trying to push me a costly products that would entitled him to higher commission. In meantime, I called up my friend who is bike enthusiast. He suggested that I should buy Amaron batteries as it hassle free and maintenance free battery and suggested that premium is worth paying. Finally, I decided to replace faulted battery with Amaron battery.


After starting my activa from 2 wheeler service station, I decided to analyze Amara Raja batteries Limited (ARBL) the Company that manufactures Amaron Batteries.


Then I reached Hobby Ideas store in nearest mall to shop for home décor material. I entered store and could easily spot all the home decor products that I had noted in my list. Staff was kind enough to explain features of new arrival products, complementary products and shared few home decor ideas (cross selling). In right corner of the store, I noticed gang of teenagers painting and decorating pots, frames and canvas.


I was astonished to see the collection of art & craft material and Do-it-yourself kit. I decided to treat myself with 2 of these kits and try some innovative dressing for me. I shopped for products as per my list - materials to make torans and colors for fabric and to paint Diyas. Along with craft material, I bought Fevicol (adhesive), Fevikwik (instant adhesive)and Fevistik(Glue stick). I also bought RangeelaColors,clay and activity book for my nephew.


Yes, all the products that I shopped in this store are manufactures by single company - Pidilite.


I decided to analyze "Pidilite Industries” the Company that manufactures number of glue related products and art and craft material.


So Friends, if you just look around, there are thousands of investment ideas.


1. We get up in morning and brush our teeth - we use Colgate (name has become synonymous with toothpaste).


2. For bathing, we select from number of soaps like LUX, Dove, Clinic Plus (all are HUL products).


3. We start our day with energy drink and breakfast. It could be Nescafe coffee by Nestle, Dabur chyawanprash or Britannia Oats.


4. Most of us enjoy Maruti cars to drive to office or on vacation. With pot holed roads and bumpy ride, we sometimes face flat tyre - MRF or CEAT tyres.


5. Don't we feel jealous when we see our neighbor swagger on Royal Enfield by EicherMotors. If not bike, then how about owning stock.


6. Downloaded movie on phone in few seconds, its 4G from Bharti Airtel or Reliance Jio.


7. Best message of the month is "Received Salary". The amount would be credited in any of our bank account. May be private banks like Axis Bank, ICICI bank, HDFC bank or public banks like SBI.


8. During festive celebration, we giftour relatives with jewelry which is shopped from Tanishq by Titan or Tribhovandas Bhimji Zaveri (TBZ) or PC Jewellers.


9. With numerous tempting offer by online shopping website - we received thoseproducts at our residence. This home delivery for products are provided by courier agencies like Blue Dart or Gati.


10. On weekend, the most common place is to go out for movie with friends - PVR Cinemas or Inox Leisure.


Do you add stocks to your portfolio by using its product or do you analyze in this manner before buying stock? If not, then – no worries - you are not alone.


If you are happy with the company's product and having pleasure experience using it, Go ahead and do some research and invest. In Peter Lynch words, if you like the store, you will love the stock to.


Disclaimer - This is not stock recommendation or investment advice. Do your research before investing.





About Namrata Shah

Namrata Shah is a Chartered Accountant and an independent finance blogger. She loves analyzing companies financials, business models, corporate governance and other aspects of the companies. She has rich experience in research, valuation and audit, assurance & advisory function in reputed organisations. She blogs at http://finance-nams.blogspot.in/ .

 

For more information please write in to [email protected]

Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.




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