How to find high growth smallcap stocks?

What This Video Is About

The video provides a guide on selecting high growth small cap stocks by applying specific filters to narrow down the search from thousands of companies. It highlights the importance of combining these filters with thorough analysis to identify attractive investment opportunities.

Major Ideas Discussed

• Market capitalization filter: Select companies with a market capitalization between ₹500 crore and ₹2000 crore to focus on small caps.
• Growth filter: Look for recent sales and profit growth above 25%, and three-year growth above 20% for both, indicating a strong growth trajectory.
• Business quality filter: Ensure three-year average ROE and ROCE are both above 20%, signifying good business quality.
• Valuation filter: Use a PEG ratio less than 1.5 to ensure the stock's valuation is reasonable compared to its growth potential.
• Further analysis: Beyond filtering, it's crucial to compare profit to operating cash flow, examine related party transactions, and evaluate valuation in comparison to growth to confirm the investment potential.

What to Watch Next

Investors should monitor the performance of small cap stocks that pass these filters, keeping an eye on their continued growth, business quality, and reasonable valuation, and be prepared to conduct in-depth analysis on potential investments.