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Is there a way to find fairly priced stocks in an inflated market?

This a great time to look for stock opportunities, as many great companies, which were not available for cheap for many years, are now under the radar, says Dhirendra Kumar

In the current scenario, how can I select the stocks of good companies?
- Anonymous

The markets look very reasonably priced and poised for being even more reasonably priced sometime in the future. But yes, people are celebrating the lower earnings reported by companies this quarter. We have never seen this before and it is quite surprising. People are quite joyful that this company did not lose so much that they expected. It is a very awkward market to be in, but still, a good part of the market has become reasonably priced. It is worth looking at things closely.

You can use our stock screener as a starting input to identify good companies. It is available in the stocks section of our website, Value Research Online. It is a very powerful tool and you will be able to customise it for all the variables. Just try and run a small query, say, the companies where there is a Return on Equity (ROE) of more than 15 per cent or companies with a PE ratio of lower than 15 per cent. It will come up with some list. And of course, don't make your decision based on this screener only, do your research as well. Look into the company little more, think of the company as you are going to become the owner and you will be holding it for a few years. Look at it from that standpoint. Look at the behaviour of the management over the past 10-15 years. It will be like a character certificate of the company.

This is a great time to look for stock investing opportunity. For the last few years, almost all impressive companies were never available cheap. But now they are coming under the radar. It will also be a test of your own ability to see how things pan out and how bad it can get.