We’ve used Capitalmind SNAP Outliers extensively to discover stocks and sectoral stories. What follows is how it helped us identify Sudarshan Chemicals, which ended up returning 200% in 15 months. You can learn more about Outliers by watching these: Tutorial 1, Tutorial 2, Tutorial 3.
We added Sudarshan Chemicals in April 2015, after it appeared in Outliers for the first time. Outliers is a discovery tool; it finds interesting stocks. But it uses momentum factors to zone in on a stock. Momentum is also caused by players buying, and sometimes the players are smart enough to have bought into a stock early. Sudarshan seemed to be this kind of a stock.
We investigated further and found something very cool. The company wasn’t richly valued, at a P/E of 17 at the time. And it was growing profits at more than 25% a year, coming off a low couple of years.
When we picked it up, the reason we noticed it was the sudden momentum in the stock, which almost begged us to look further:
Outliers helped us discover the stock. Other research helped us get further! Today the stock has gone up 3x, about a year after we bought, as the discovery process and P/E rerating has taken the stock up big time – even now, the stock trades at a P/E of 29, but the profit growth has been over 66% in FY2016.
With input from Outliers, we’ve found some enormously interesting stocks that didn’t just make the momentum grade, they joined the longer term portfolios as well. Sudarshan is one of them.
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Disclosure: The authors at Capital Mind have positions in the market and some of them may support or contradict the material given above, or may involve a direction derived from independent analysis.