Tweet Buster: EPS growth junk food, warns Basant Maheshwari

NEW DELHI: As the 30-share BSE benchmark gained 424.11 points or 0.86 per cent during the week despite foreign investors pulling out Rs 5,936 crore from Dalal Street in the first week of May, excitement from retail investors was visible on Twitter too despite worries over the second wave of Covid-19.

In this edition of Tweet Buster, we scan through the social media platform to find investing strategies, behavioural hacks, market outlook and more.

Financials really that risky?
PMS fund manager Basant Maheshwari said the best performing stocks in the market have little to with India. “For the first time since 2009, we have zero exposure to financials – exited in late 2020. It was a tough call but we learn from the past and move ahead.”

Revenue or EPS?
While replying to a question from a Twitter user on how which factors should one consider while studying a company, Maheshwari advised him to focus on sales growth and not on EPS growth. “EPS growth is junk food, sales growth is the staple
daal chawal. Interest rates don’t decide sales growth, they influence EPS growth. Sales growth indicates market share capture, EPS growth tells you about cost cutting which can happen only upto a point.”

Conviction matters
Market veteran Shyam Sekhar of iThought Advisory said opportunistic technical buyers of stocks, who jump onto successful big trades, love to believe that is the only way to make money. “But, nothing rewards better than high conviction investing at the point of maximum pessimism. The scale of profits is simply not comparable,” he said.

In another tweet, he said most conviction compounds with the rise in stock prices.

Investing funda
Mumbai-based financial trainer P V Subramanyam explained his investing edge in four points: 1) No continuous scrutiny, 2) Don’t care much about cycles 3) Don’t chase performance. In the long term, I need absolute returns, not relative 4) No stand on any company, but once I take a stand I hold it for decades.

For SIP lovers
Smallcap hunter and value investor Arun Mukherjee gave out a list of 10 stocks, that according to him, are fit for doing SIPs. Names included Nestle, HDFC Bank, Asian Paints, HDFC Life and Bajaj Finance.

Mukherjee also advised investors to not deploy emergency funds in stock markets even if the opportunity is very attractive. That’s a recipe for disaster, he said.

Pick them small
Microcap hunter Ian Cassel said investors need to study great stocks, great businesses, and great leaders. “Hundreds of them. Put in the reps so you develop pattern recognition – and then go find them when they are small.”

Yellow metal bet
Independent market expert and investment advisor Sandip Sabharwal said it looks like gold has started its next leg of rally as inflationary fears grow. He said gold rates could go towards $2,300 over 12-15 months.