I wanted to ask that to select any stock fundamentally which ratios we should look and what are their ideal values ?
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No stock should be selected based on a company’s ratio in isolation. When using fundamental ratio’s always compare it with its peers. This also means there is no ideal ratio.
For example Company X may have a Return on Capital employed of 23%, which is great…but what if Company B in the same sector has a Return on Capital employed of 35%?
Hence to choose a fundamentally strong stock, always compare with peers and industry averages.
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Stock market is not the projection of actual asset value of the company, rather it is emotions (fear and greed) on the stocks. Thats the reason, sometimes, the fundamentally strong company is not doing better in stocks and vice versa.
Yes, you can check fundamental factors if you really want to go for very long term investment (3 yrs or more) but for less than that, fundamentals will not do much.
There could be better answer for your question but this is my view, thanks
Hello Karthik - Are there any single web resource to look and compare fundamental ratios. I find them scattered across - moneycontrol, reuters,google finance. No one place seems exhaustive ( for free). If you do have some please share.
Mystique - unfortunately this is the case. Also someone them publish these ratios wrongly. For example - Some work with standalone number while you are supposed to be dealing with consolidated numbers. Hence I always prefer to calculate them on my own.