Rule of 20 Stocks | Equitymaster (2024)

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20-20-20 stocks are stocks of those companies that are growing sales and profits at 20%, and also have ROE above 20%.

These stocks are highly sought after as they offer highly profitable growth as well as strong business fundamentals.

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CompanyCMP
(Rs)
Sales CAGR
(3 yrs, %)
Profit CAGR
(3 yrs, %)
RoE
(3 yrs, Avg. %)
MCap
(Rs m)
P/E
(x)
D/E
(Curr FY, x)
L&T INFOTECH4,936.245.0%42.6%27.4%1,461,90731.80.0
VARUN BEVERAGES1,398.135.4%80.5%26.3%1,816,67886.40.7
TITAN3,804.824.5%29.9%21.4%3,377,80497.60.6
PERSISTENT SYSTEMS3,989.332.8%39.4%20.8%614,54429.80.1

* We show NM where the values are negative

Disclaimer: This is for information purposes only. These are not stock recommendations and should not be treated as such. Learn more about our recommendation services here... Also note that these screeners are based only on numbers. There is no screening for management quality.

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FAQs

Which are the top stocks in India with strong sales and profit growth (over 20%) and with an ROE of above 20%?

As per Equitymaster's Stock Screener, these are the top stocks in India with a sales and profit growth of over 20%.

  • #1
  • #2 VARUN BEVERAGES
  • #3 TITAN
  • #4 PERSISTENT SYSTEMS

These companies are ranked as per their 3-year profit compounded annual growth rate (CAGR) and their 3-year sales CAGR. They also have a return on equity (ROE) above 20%.

For more, check out the high ROE stocks in India.

Before forming a hard opinion on the stock, there are other parameters you should take into account as well.

What is the 20-20-20 rule?

The 20-20-20 rule filters stocks of those companies that are growing sales and profits at 20%, and also have return on equity (ROE) above 20%.

The stocks that pass these criteria are highly sought after as they offer highly profitable growth as well as strong business fundamentals.

This is not a hard and fast rule, but an investing idea that matters. So, you can even replicate it with 15% growth in sales and profits along with an ROE of 15%.

Are there other investment methods like 20-20-20 that filter possibly the best stocks to buy?

Besides the 20-20-20, there are numerous strategies on how to go about investing in the stock market. At the end, it all comes to your risk appetite and your holding period for stocks.

Here are a few that investors follow across the globe:

What factors should you keep in mind before investing in a stock?

Here are some factors that long-term investors must look at while taking an investment decision:

#1 The business model - Understanding the business model of a company is important because it provides the investors the knowledge about the competitive edge of the company. It also provides better insight into working of the company.

#2 Management of the company - The management is the driving force behind the success (or failure) of the company. One of the most important things it does is allocate capital. This has an enormous impact on the enterprise value.

#3 Competition - The purpose of a competitor analysis is to understand your competitors' strengths and weaknesses in comparison to your own and to find a gap in the market.

#4 Financial analysis - This will help you determine the creditworthiness and profitability of the company. It will also provide a more in-depth look at how well it operates internally.

#5 Valuations - Valuation is important because it provides prospective buyers with an idea of how much they should pay for an asset or company and for prospective sellers, how much they should sell for.

The more undervalued the company, the better.

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Rule of 20 Stocks | Equitymaster (2024)
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