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Here is a list of best stocks which one can buy with an objective of LONG TERM holding.In fact: I use this list for myself to unearth few good stocks from a heap of average ones.What is the strategy? How to identify best stocks trading in Indian stock market?How to start?Buying stocks of companies which has high sales, high net profit, or high dividend payout is not going to work.Not that these stocks are bad, but it also essential to do further checks.In this blog post, we will discuss what a long term investor must check in stocks before buying it.1. WHICH ARE BEST STOCKS?Best stocks are ones, which represent a “good business”, and are also available at “undervalued price” levels for investing.Good business: Which is good business? There can be several contributing factors, but what works best is ‘free cash flow’. Read about blue chip stocks.Undervalued Price: What is undervalued price? For this one must know the ‘intrinsic value’ of a stock. When market price less than its intrinsic value, stock is undervalued. Read about low PE stocks.A good business will always generate high free cash flows. High free cash flow will eventually lead to high intrinsic value. Check free cash flow based calculator.When intrinsic value is high, there are more chances to find it at undervalued price levels.So what is the takeaway from here? Look for stock with high free cash (FCF).See how good business builds its intrinsic value (use MS Excel to estimate intrinsic value)2. WHICH ARE UNDERVALUED STOCKS?Suppose a stock is trading at a market price of Rs.100/share. Upon estimation, its intrinsic value comes out to be Rs.120/share.As market Price is less than intrinsic value, stock is said to be undervalued.To identify best stocks, the essential ingredients are the following:Free cash Flow (FCF), andIntrinsic Value (IV). Read more on IV formula.How to identify best stock? FCF will help you to estimate IV.Then one can compare the current market price with its estimated intrinsic value to check undervaluation. Read more on undervalued stocks.3. COMPLICATION TO IDENTIFY BEST STOCKSIt is not possible to accurately identify best stocks without knowing their free cash flow and intrinsic value.Does this understanding make best stock picking simpler? Yes and No.Yes, because we now know what stock parameter must be looked at to pick best stocks. Otherwise we simply waste our time looking at less important stock metrics like financial ratios etc.No, because estimation of both ‘free cash flow’ and ‘intrinsic value’ is a special skill. Only gifted people can do it accurately.So how a common man, who knows nothing about stocks can identify best stock? It is a tough task, but I have a solution for it.4. THE ULTIMATE SOLUTIONWhy I’m calling it ultimate? Because the solution lies within us. How?Learn to estimate intrinsic value of stocks by self.From my experience, I can say three things about intrinsic value estimation:First: Estimating an approximate intrinsic value of stocks can be done by anyone. No special skill is necessary.Second: The more one practices estimating intrinsic value, the accuracy improves.Third: It is better to believe in the intrinsic value estimated by self, rather than buying stocks on others advice.I am sure these points are making sense, right?But some might say that estimating intrinsic value estimation is tough – how to learn it?This is where my stock analysis worksheet can be helpful. How? You can actually see for yourself the financial reports data being converted into intrinsic value.Reading this article, and using my excel worksheet can give huge clarity about intrinsic value estimation even to a novice.A few days of practice can clear a lot of cloud about intrinsic value.So lets process and try to learn how to estimate free cash flow and intrinsic value of stocks…5. WHAT BUILDS INTRINSIC VALUE?Before we get into the math part of intrinsic value, let’s understand what are the steps involved in estimation of intrinsic value.There are several methods of estimating intrinsic value of stocks. One of the most reliable method is discounted cash flow model (DCF). You can read this post to know more about it.But here what I will show you is a hybrid method of “dividend discount model’ and DCF.In this hybrid model, there are three steps which ultimates helps us to build the intrinsic value:Step #1 (FCFE): Calculate the present Free Cash Flow to Equity (FCFE).Step #2 (FCFE Growth): Forecast FCFE growth rate for next one year.Step #3 (Expected Return). Quantify your ‘expected return’ (say 5%, 8%, 12% etc).Step #4. Calculate intrinsic value.5.1 HOW TO ESTIMATE FREE CASH FLOW (FCFE)A stock must show a positive free cash flow (FCFE). If not, then its intrinsic value will also go in negative.Only if the FCFE is positive, the stock may stand a chance to become undervalued.How to estimate free cash flow? Free cash flow formula is like this:To estimate free cash flow, get the following values from the company’s financial reports:PAT: Open the ‘profit and loss account’. Note the numbers mentioned against ‘net profit after tax’.CAPEX: Open the ‘cash flow statement’. Go to ‘Cash flows from investing activities’. Note the numbers for ‘purchase and sale of capital assets’.D&A: Open the ‘profit and loss account’. Go to the section where all ‘expenses’ are listed. Note the numbers mentioned against ‘depreciation and amortisation’.Increase in Working Capital (WC): Open the ‘balance sheet’. Note current assets (CA) and current liabilities (CL). The formula for change in WC will be like this:Increase in CA = CA (Y2018) – CA Y(2017)Increase in CL = CL (Y2018) – CL (Y2017)Increase in WC = Increase in (CA – CL).New Debt: Open the ‘cash flow statement’. Go to ‘Cash flows from financing activities’. Note the numbers for ‘purchase and sale of capital assets’. Note the numbers mentioned against ‘Proceeds from borrowing’.Debt Repaid: Open the ‘cash flow statement’. Go to ‘Cash flows from financing activities’. Note the numbers for ‘purchase and sale of capital assets’. Note the numbers mentioned against ‘Repayment of borrowing’.Gather these values in your excel sheet and calculate the free cash flow (FCFE) as indicated below.Note the ‘Formula‘ column. This way, one can arrive at ‘free cash flow‘ numbers for a stock.Important points to note about free cash flow calculation:FCFE must always be positive.If a company is in expansion mode, its Capital Expenditure (CAPEX) will be high. High CAPEX often leads to lower FCFE. But such companies will eventually yield higher FCFE in times to come. The waiting time for FCFE to become positive can be 3+ years.Sudden increase in Current Assets (CA) compared to Current Liability (CL), will also lead to lower FCFE.A company relying too much on “long term debt” (year after year for longer duration of time) for enhancing its FCFE is not a good sign.Good companies rely less on debt. Their major cash comes from PAT & provisions of D&A.5.2. HOW TO ESTIMATE FCFE GROWTH (G)?In the above step we have estimated the Free Cash Flow (FCFE) of a stock.Now we must estimate the expected rate at which the above FCFE will grow in next 1 year time (g).There are two ways to do it, easy way and the difficult way.Easy way: Assume it to be 5% (g = 5% p.a). Logic, in India the average inflation over a period of last 10 years is close to 7.5% per annum. Over a period of time, a good company will make sure that its Free Cash Flow (FCFE) must beat the inflation rate. But this will happen only in long term. In shorter time horizon (like next 1 year), assuming a smaller growth rate (less than inflation) is better. Hence we can settle g=5%. If you want, you can repeat the calculation for other g values like 3%, 6% etc.Difficult way: Calculate the FCFE for last 5 years. See the trend and then make a safe assumption. But I will suggest that, initially do not go the difficult way. Downloading annual reports, searching data in the reports, preparing the excel sheet will take time. If you afraid of losing the interest, begin with the easy way. If after the calculation, the stock looks attractive, repeat the process using the difficult route. Another option can be, use my stock analysis worksheet.5.3 WHAT SHOULD BE THE EXPECTED RETURNS (K)?This step will be easy.But important Note: K must always be more than g. Here as well, I will suggest you to use a rule of thumb (k= 8% per annum).Logic, in a long time horizon (5+ years), Sensex/Nifty can grown at a rate of 12% p.a. But at present we are making an assumption for next 1 year only.Hence a smaller rate of return (w.r.t. 12%) shall be assumed. Hence I have settled for rate of return of g=8%.My suggestion will be to repeat the calculation with the following combination of “g & k” values:5.4 CALCULATION OF INTRINSIC VALUEWhat we have in hand till now?FCFE.FCFE Growth Rate – for next 1 year (g)Expected Return – for next 1 year (k)With these values we can estimate the intrinsic value of any stock using a formula.What is the formula? It is called Gordon Growth Model.Intrinsic value = Dividend / (k – g)But in our hybrid formula, we have replaced Dividend with FCFE. This way our new formula looks like this:Intrinsic Value = FCFE / (k – g)What is the logic for this alternation?In the Gordon Growth Model, dividend is taken in consideration as its ‘real earnings’ reaching the hands of investors. In other words, it is the dividends which is creating real value for the shareholders.The real value generator (dividend) in turn is determining the intrinsic value of the stock.Similarly, free cash flow has powers to create real value for the shareholders. How? In two ways:One: A part of FCF can be used to pay dividends to the shareholders.Two: Another part can be reinvested back into the business to fund future growth (resulting in capital appreciation).The real value generator (FCF) in turn is determining the intrinsic value of the stock (using the hybrid formula)Examples of intrinsic value calculation:6. BEST STOCKS ARE UNDERVALUEDHow to check if the above stocks are undervalued or not? Just follow the below 2 steps:Calculate IV/share (N): What is IV per share? Intrinsic value converted to per share value. How to do it? Get the ‘number of shares outstanding’ of the company from its financial reports. IV/share = Intrinsic value / N.Compare: Compare the calculated IV/share with the current market price of the stock. If IV/share is more than current price, the stock is undervalued.Now matter how strong is the underlying business, a stock cannot become a good buy till its market price is ‘undervalued’.7. NECESSITY OF STOCK ANALYSISThere are 5,000+ stocks currently trading in Indian stock market (BSE). Out of these, which are the best stocks?The answer is not easy. In fact, the answer is so unique that people who can find this answer have become millionaires.We common men can find this answer? Yes it is possible.But we have to follow a procedure. We can use two basic screening criteria’s. This will help to identify best stocks among ordinary ones.What is this screening criteria?When people undertake the process of intrinsic value estimation of a stock, they are actually following these 2 screening criteria:Screen #1: Remove fundamentally weak stocks. How it is done? Only those stocks whose free cash flow is positive are fundamentally strong.Screen #2: Remove overvalued stocks. How this is done? Only those stocks whose market price is less than its intrinsic value per share are undervalued.LIST OF BEST STOCKS TO BUY IN INDIA IN 2019(Updated on 13th-Aug-2019)Size: Size of Company in terms of its Market Capitalisation.M.Cap = Market Capitalisation in Rs.Crore.FCF: Free Cash Flow in Rs.Crore.FGR: Estimated Future Growth Rate for next 1Y (%).EGR : Expected Growth Rate for next 1Y (%).Valuation: Stock is undervalued or overvalued.StocksBOTTOM LINEI hope this post showed you a shortcut of how to estimate intrinsic value and find best stocks to buy.But you must be wondering, “how to put this theory into practice?”Well I’ve something special for you (My stock analysis worksheet).This worksheet can convert all this theory into actionable steps.Check the screenshot of the report generated by my worksheet:Kindly upvote my answer and follow me.

Yes, we have received approvals for level 1 wage FY 18 H-1B cases.Here is part of what was included on our RFE response:Specifically, the DOL Policy Guidance identifies five (5) steps involved in the process for Determining Wage Level (section 2. on page 7). The DOL Policy Guidance provides a worksheet to utilize to “arrive at the appropriate wage level.” The DOL Policy Guidance further states “[p]oints are awarded based on the comparison of an employer’s job offer requirements (emphasis added) to the general requirements for similar positions. The points are entered on a worksheet then added to arrive at the wage level.” There is no mention in the DOL Policy Guidance of an analysis of the complexity of the job duties in determining the wage level, ONLY the requirements.The RFE’s interpretation of the DOL Policy Guidance to undermine the validity of this H-1B petition is baseless and without merit. The expert opinion letter by Professor First Name LAST NAME clearly establishes that this position is in fact an entry-level position in the field of Information Technology, which, nonetheless, requires a minimum of a Bachelor’s degree in Computer Science or a closely related field to perform the proffered job duties (see Exhibit A).The wage level was ascertained by the employer utilizing the worksheet provided by the Policy Guidance. Please see same attached hereto as Exhibit B.This position falls into the category of Job Zone 4, which has a commensurate SVP of 7 to less than 8 described on the O*NET Online Help page, available at https://www.onetonline.org/help/online/zones. The proffered position of Computer Systems Analyst is both complex and an entry level wage, as the wage level is not an analysis of the complexity of the work to be performed. (see Prevailing Wage Determination Policy Guidance (Revised November 2009) issued by the Department of Labor and confirmed by the Expert Opinion letter attached as Exhibit A).The wage level is limited to an analysis of the minimum job requirements of the employer as compared to the general requirements for similar positions. The determination of whether the submitted LCA properly corresponds to the proffered position is based on a comparison of the tasks of the proffered position with the tasks of SOC code 15-1121 as identified at https://www.onetonline.org/link/summary/15-1121.00 , to determine if it most closely matches the tasks of the proffered position.Additionally, the employer is actually paying above the Level 1 wage as stated in the LCA. Further emphasizing the point that the employer’s determination of wage level is based solely on the DOL guidance. Although no regulation has been promulgated pursuant to Executive Order 13788 of April 18, 2017 (EO 13788), the payment of the higher wage by the U.S. employer as well as the petition beneficiary’s qualifications, are consistent with the policy espoused in EO 13788, that H-1B visas [be] awarded to the most-skilled or highest paid petition beneficiaries.It should be noted that the Vermont Service Center I-129 H-1B Local Adjudicator’s Guide (VSC LAG) of January 3, 2014 states that “Certification by the DOL of an LCA in an occupational classification by the DOL does not constitute a determination by that agency that the occupation is a specialty occupation. It would therefore be conversely inappropriate to utilize that same document as a determination that the proffered position IS NOT a specialty occupation. The VSC LAG states that the certification by the DOL of the LCA is only to be used for the following purpose - employer has agreed to the following:Offer the actual wage level for the occupational classification at the place ofemployment, or the prevailing age level for the occupational classificationin the area of employment, whichever is greater, determined at the time offiling the LCA.• Provide working conditions for such aliens that will not adversely affect the working conditions of U.S. workers similarly employed.• Attest on the day the application was signed and submitted to DOL that there was not a strike, lockout, or work stoppage in the course of a labor dispute in the occupational classification at the place of employment, and if such a strike, lockout, or work stoppage occurs after submitting the application, the employer will notify the Employment and Training Administration (ETA)" within three days of such occurrence and the application will not be used in support of a petition filed with USCIS for H-IB nonimmigrants to work in the same occupation at the place of empIoyment until the ET A determines the strike, lockout, or work stoppage has ceased.• Provide notice of filing to the bargaining representative (if any) or have a posted notice of filing in conspicuous locations at the place of employment.The LCA presented by the employer was not and is not a statement by the employer with respect to the specialty occupation nature of the position nor should it be treated as such based on the VSC LAG.In support of the above, please find the following additional evidence requested in the present RFE:Exhibit D: Petitioner’s Organizational chart, detailed HR structure, detailed descriptions of positions, and the allocation of time spent on each job duty by Computer Systems Analysts.Exhibit E: Petitioner’s Employee Benefits/Policies HandbookExhibit F: Evidence pertaining to the Petitioner’s business operations:-Website copy-Business plan-Contractual agreements with clients-Promotional/marketing materials-Tax filingsExhibit G: Additional evidence establishing availability of specialty occupation work for the Beneficiary for the validity period requested.Exhibit H: Beneficiary’s qualifications for the proffered position

First and foremost, it's people's inability to handle uncertainty. Public invests when confidence is high, which typically happens when the market is nearing the top. Retail investors exit the market when confidence is close to a trough, which normally occurs when markets are bottoming, resulting in a massive surrender of wealth. Statistics for this phenomena are mind boggling to me. Studies show that investors sacrifice about 70% of potential earnings just due to emotions.Secondly, and sadly, most people outside of investment industry (and shockingly a large number within investment industry) don't seem to understand that they are not buying a "price" of a stock or a story behind company's product. They are buying prospect of earnings yield and earnings growth.Many retail investors seem to have a poor grasp of mathematics behind trading and management fees. Just because someone is charging you only 1% a year for their investment advice, it doesn't mean you are getting a cheap service. This is particularly so if your utilities focused portfolio is setup to earn a mere 4% a year. That investment advice is taking away 25% of your annual earnings as a fee.... and that's before Uncle Sam comes to collect taxes.People often look at a stock market with an attitude, which can be summarized as "oh, that looks easy". They are seduced by stories of success and yearn to join the crowd. The reality is, stock analysis is hours of painstaking work with something as sexy as an income statement and cash flow worksheet. On the main street, there is often a sense of bewilderment and even agitation at how some professional investors seem to capture huge returns at, seemingly, the expense of everyone else. Retail investors discuss and mention such names in hushed tones. What they don't see, is how much work and sweat went into getting it right.There are many others reasons of course, but if these four points are addressed, we, as a society could substantially reduce existing wealth divide.