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📊 Affle India  CMP : 1209 Up by 12.8% #Update

*Q: What are Cyclical and Non-Cyclical Stocks?* Let's Simplify - During a recession, if you lose your job at a private company, you'd likely avoid buying items like cars, bikes, jewelry, or a new house. These are considered non-essential or luxury purchases. - Even during a recession, there are purchases you can't avoid, such as daily necessities like food and medicines. These are considered essential items. Products you can avoid during a recession are typically from the cyclical sector, while essential products you can't avoid are from the non-cyclical sector. *Q: What are some signs that indicate a cyclical stock is at its peak or bottom?* Signs of a cyclical stock reaching its peak include (opposite to non cyclical stocks) - Low price-to-earnings (P/E) ratio - High dividends - Rising earnings per share (EPS) - Positive news surrounding the company Signs of a cyclical stock hitting bottom include a - High P/E ratio - Negative news - Falling earnings - Lower dividends Industries such as steel, automotive, chemical, paper, and aluminum often feature cyclical stocks. *Q: Why do cyclical stocks often perform poorly during a recession?* Cyclical stocks tend to suffer during a recession because their growth is closely tied to overall economic growth, particularly GDP growth. When the economy slows down, these stocks often face challenges. *Q: Despite their poor performance during a recession, why do cyclical stocks often rebound quickly when the economy starts to recover?* Even though cyclical stocks struggle during a recession, they're usually the first to bounce back when the economy starts to recover. This quick rebound is often driven by investor anticipation of improved economic conditions, even if the fundamentals of these companies still appear weak. Generally earnings per share (EPS) of cyclical stocks is highly fluctuating *Non-Cyclical EPS:* - Year 1: 2.20 - Year 2: 2.35 - Year 3: 2.70 - Year 4: 2.90 - Year 5: 3.20 *Cyclical EPS:* - Year 1: 2.20 - Year 2: 0.50 - Year 3: 1.50 - Year 4: 0.30 - Year 5: 2.30

Remember : Stock market is for your Need and not for the Greed.

KYC - "Know Your Company" Before Investing 🛑Red Flags in Investing - *High Inventories Growth*: When inventories growth surpasses sales growth for three consecutive years or more. - *Promoter Behavior*: Beware if a company issues a Right offer to reduce debt, and promoters start selling shares after the right issue. - *Continuous Losses with Rising Promoter Salaries*: If a company consistently makes losses but promoters keep increasing their salaries, it's concerning. - *Spike in Account Payables without Sales Growth*: A sudden increase in account payables without corresponding sales growth might indicate an attempt to show positive cash flow. - *Negative Cash Flow with Dividend Payments*: Watch out if cash flow from operations remains negative for three years while the promoter keeps paying dividends. - *Increasing Promoter Pledges*: When promoters pledge their shares without concurrent growth in sales and profits. - *Promoter Pledges for Personal Use*: If promoters pledge their shares for personal needs, it's a red flag. - *High CFO and Auditor Turnover*: A company with frequent change in CFO and auditor positions could signal instability. - *Annual Report Composition*: Be cautious of companies whose annual reports contain excessive images, drawings, or special features, as it could be an attempt to mask underlying issues. - *Overconfident Earnings Guidance in Unpredictable Businesses*: When management of a non-predictable business confidently offers earnings guidance, it's a red flag. #Investing Take Care of your HEALTH & WEALTH