Which are the top stocks in India that pass the Peter Lynch filter?
As per Equitymaster's Stock Screener, these stocks could potentially meet Peter Lynch investing criteria.
- #1 TRENT
- #2 SHRIRAM TRANSPORT
- #3 TITAN
- #4 EICHER MOTOR
- #5 AVENUE SUPERMARTS
Peter Lynch is known to have made the 'buy what you know' formula famous. Much of his success is attributed to his knack for picking companies with businesses he understands and focusing on their earnings and assets.
Who is Peter Lynch?
Peter Lynch is heralded as one of the most successful investors of all time.
He was the manager of Magellan Funds at Fidelity Investments from 1977 to 1990. During these years, Peter Lynch grew the fund from US$ 20 million (m) to over US$ 14 billion (bn) in 13 years.
He averaged a 29.2% annual return on investment (before fees) which was substantially better than the S&P 500 Index, making Magellan the best performing mutual fund in the world.
What is Peter Lynch's investing philosophy?
Peter Lynch firmly believed that individual investors had inherent advantages over large institutions. He posited that large firms can't or won't invest in smaller companies that have yet to receive attention from analysts or mutual funds.
Advocating the bottom-up approach to stock picking, his investing style can be summed up into three basic tenets; buy what you understand, always do your homework (research), and invest for the long term.
What is the bottom-up approach?
It is an investment approach that focuses on analyzing individual stocks and de-emphasizes the significance of macroeconomic and market cycles.
Bottom-up investors focus on a specific company and its fundamentals, whereas top-down investors focus on the industry and economy.
This approach entails studying and analysing the business fundamentals, growth prospects, management, and valuation over a long period.
Which are the books written by Peter Lynch?
Once his stellar track record running the Magellan Fund gained widespread attention, Lynch went on to pen down several books outlining his philosophy on investing. He was never afraid of sharing his 'secret sauce' to great investing.
Some of the books by Peter Lynch are One Up on Wall Street, Beating the Street and Learn to Earn.