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One up on D-street: Invest the Peter Lynch way

How to use our stock screener to select companies like Peter Lynch

One up on D-street: Invest the Peter Lynch way

dhanak हिंदी में भी पढ़ें read-in-hindi

From mixing the discipline of value investing with the aggressiveness of growth investing to popularising the philosophy of "investing in what you know", Peter Lynch's contributions to the investing world are far too many.

The legendary fund manager managed to multiply the corpus of Fidelity Magellan Fund a mind-boggling 28 times in 13 years.

And it wasn't just the returns. What set him apart was his humility. He believed that with enough research and patience, anyone could match the stock-picking prowess of a fund manager.

So to find out if we have a firm grasp on Lynch's investment philosophy, we turned the clock back to 2018 and picked companies based on his philosophy.

Here are the filters we applied.

  • M-cap of at least Rs 500 crore;
  • Debt-to-equity of less than one;
  • Return-on-equity of more than 15 per cent;
  • Five-year earnings growth of more than 15 but less than 30 per cent;
  • Institutional stake of less than 30 per cent;
  • Price-to-earnings of less than 15 times.

We got 28 companies after applying these filters. Next, we checked the five-year return of these companies.

We found that out of the 28, seven beat the five-year return of the BSE Sensex (an annual return of 12.1 per cent)

Here are the returns of the seven outperformers.

How to pick stock like Peter Lynch
Who wouldn't want Peter Lynch as their personal investment advisor?

While we might not be able to arrange a meeting, you can use our stock screener to pick stocks like Peter Lynch. We have a premade screen based on his stock-picking strategy in our screener.

Based on our screener, there are presently 27 listed Indian companies Peter Lynch would be interested in. To access the list of companies, click here.

Disclaimer: This is not a stock recommendation. Investors are advised to do the due diligence before investing.

Suggested read: Timeless wisdom from Peter Lynch


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