Which Stocks to Buy – According to Warren Buffet (10+ Tips)

Today we will talk according to the world’s richest Warren Buffet Which stocks should I buy and which stocks can give the highest multibagger returns?

Whenever it comes to stock market investing, Warren Buffet’s name definitely comes and we all try to know about his investment strategy.

But every time you get to hear the same old worn out rules and their quotes, but no one tells us that.

  • How Warren Buffett Chooses Multibagger Stocks,
  • how to analyze business,
  • How to find the intrinsic value of a share,
  • And at what price does he buy the share,

No one tells you all these things, whereas Warren Buffet discusses all these things every year with the shareholders in the annual meeting of his company Berkshire Hathaway.

Today in this article, we have included his investment strategy in this article, through which we will try to know that according to Warren Buffett Which shares should I buy?

Which shares should I buy? (Conse share kharide)

Which shares should I buy, Conse share kharidna chahiye

Don’t know how many list of the world’s richest people have come and gone but the name of warren buffet has remained in this list continuously for the last 30 years. From this you can guess that according to Warren Buffett which stock to buy How important is this thing?

Let’s know according to them which shares to buy And what things they look for while buying shares, what is their investing strategy, let us know one by one.

1. Buy shares of a company whose business you understand

the first rule is You should buy shares of the same company whose business you understand, Do not buy shares of any such company whose business you do not understand, even if that share is popular, how cheap it is getting at a price and no matter how high the business profit, all these things do not matter.

Matter does business of that company Meaning;

  • What is the company’s product or service?
  • And do you yourself use that company’s product or service,
  • What is the business model of the company,
  • Who are the competitors of the company,
  • Does the company have any competitive advantage by which it can avoid competition, that is, what is such a feature in the company that the competition is not able to take away its market share or profit.

Competitive advantage is a very important factor in any business which helps the company to earn long term profits.

  • For example, Hindustan Unilever And asian paint have a competitive advantage over their distribution network, similarly pidilite They have the only competitive advantage of their customer bonding which puts them ahead of the rest of the companies in the sector.

Related, Which company’s shares did you buy?

2. Estimate the profit of the company for 10-20 years

You should buy shares of the company whose products you use yourself. Because only then you will be able to estimate how much profit the company will earn for the next 10 to 20 years.

  • For example; Britannia Industries Whose biscuits you eat every day, then you know that the demand of this company is going to be there for years, that’s why this company will be profitable continuously, thus it is not very difficult for you to estimate its profit for the next few years.

But it is very difficult to estimate the profit of the company whose products you do not use or whose business you do not understand, such as-

nowadays Adani Green The company’s stock is very much discussed because the demand for renewable energy is going to increase in the coming time and this company works in this sector. But should you buy Adani Green shares?

You should take shares of this company only if you understand the renewable energy sector very well otherwise if you buy stocks in crowd of others then you are doing speculation and not investing.

Related, Which shares should I invest in?

3. Must do Management Analysis

It is important to do management analysis of the company because no matter how good and profitable the business is, but the management is not honest, is hiding something from you or how that company is caught in a fraud case, then there is a possibility that your entire money can be lost.

That is why check the track record of the top management of the company i.e. CEO, director, chairman etc.

After doing business analysis, you should buy shares of that company whose management is completely transparent, meaning;

  • Management should share everything with its shareholders
  • If the management has made any mistake then they should
  • mistakes must be made
  • If the company has launched a new product and it fails, instead of blaming the market, it should admit its own shortcomings and rectify them.

This is a very important point because if the management accepts its mistakes, there is a good chance that they will correct them.

That is why it is very important to do research on the management while buying shares because if the management is not honest, then somewhere he will think of stealing and running away, that is why one should always buy the shares of the same company whose management is completely honest.

Related, What to do before buying shares?

4. Buying should be done by looking at the financial quality of the stock

To check the financial quality of the stock, you need to see 4 things-

  1. Debt to Equity Ratio: The debt equity ratio of the company should be less than 1 or if the company is debt free then it is better to invest because when the company does not have debt it never closes.
  2. PEG RatioTo find out if the company is overvalued or undervalued, look at the PEG ratio. If it is less than 1 then the company is undervalued, 1 is the fair value and if it is more than 1 then the overvalue.
  3. High Return on Equity: Return on Equity means what % of profit is making every year now above Re 1 for its shareholder. By the way, you should buy shares of the same company whose ROE is more than 20%.
  4. High profit marginThe profit margin of a good business is always high. If the profit margin of a company is low, then it means that the company is facing difficulty in increasing its price and due to this it is not able to get ahead of the competition.

Apart from these four, you can also keep an eye on dividend and free cash flow.

Dividend,

Buying shares of a company that gives its remaining profit to the shareholder in the form of dividend, but if the company does not pay dividend, then the share price should increase from that retained earnings.

Because the shareholders have the right on the profit and if the company does not pay dividend, then at least it can benefit you by increasing the share price, but if the share price is not even then it means that the company is not using its cash properly. If doing so, then there is no point in earning profit of the company because it has not reached the shareholders.

free cashflowYou should also check the free cash flow of the company because the more free cash the company has, the stronger it will be financially.

read this also,

5. Shares should be available at a lower price

You should always buy shares of a company which is getting at a lower price, meaning its valuation is much lower than its original intrinsic value.

To invest in shares at cheap valuations, first you should know the intrinsic value of the company. Intrinsic value is always an estimate as you cannot know the actual value of any stock.

After extracting the estimated intrinsic value, compare it with the market price of the company. If that share is getting at a price less than your estimated intrinsic value then you can buy it and wait if it is costlier than your intrinsic value.

Now you must be thinking that how to extract the intrinsic value of the company, then we have written a detailed article on this which you can read by clicking on the link given below-

What is intrinsic value and how to calculate it?

6. The revenue and profit of the company should grow by 15% every year.

If the company is able to increase sales and profit rapidly, then it is a good sign that the business is strong.

Suppose if the profit of a company is 1 crore in 2022, then in the next year 2023 it should become at least 1.15cr means there should be 15% minimum growth.

Ralated, When should I buy and sell shares?

7. Keep an eye on future plans

It is very important to know about the future plans of the company because you will get an idea of ​​how the company will perform in the coming time from its future plans.

The best way to know the growth of the company is to read the annual report., Apart from this, you should listen to the earning calls of the management, I will let you know what steps the company will take to grow in the future.

Any company grows in 3 ways-

  1. by launching a new product
  2. By passing the old product to the new logo
  3. By closing that part of your business which is in loss.

For future perspective read the article given below,

8. Read the Financial Statement

Three things come under the financial statement;

  1. balance sheet
  2. profit and loss statement
  3. cash flow statement

Whoever you want to buy the shares of the company, definitely check these three things as you will get to know about the financial condition of the company.

FAQ’s (Which company stock should I buy)

Which company’s stock should I invest in?

Money should be invested in such companies whose fundamentals are strong, management is honest, competitive advantage and the company is increasing profit rapidly year after year.

Which stock is good to buy?

It is good to buy shares of companies whose business is going to grow rapidly in future and its product demand is increasing day by day.

Which stock should I buy for the long term?

If you want to invest for a long time, then buying shares of such a company which has the potential for growth and the product demand of the company should be maintained in the future as well as the management of the company should also be honest.

Conclusion (conse share kharidna chahiye)

I hope you like this post according to Warren Buffet which shares should i buy Must have liked it. After reading this, you must have understood in which stock you should invest.

I always try that the readers get to learn something new in every article and that is why I try to give every information in detail.

If you have any question or suggestion related to this post, then definitely ask in the comment box.

Deepak SenAbout Author My name is Deepak Sen and I am the founder of this blog. Here I regularly share useful information related to share market, investment and finance for my readers.

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