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![selvaprathee Avatar](https://lunarcrush.com/gi/w:24/cr:twitter::2165141011.png) Investors Compass [@selvaprathee](/creator/twitter/selvaprathee) on x 11.6K followers
Created: 2025-07-20 19:45:08 UTC

Core Portfolio Strategy: Phases of  Rerating Cycle for compounders

1️⃣ Phase 1: Valuation Catch-up
- Sector tailwinds (policy, capex, demand surge) drive FOMO. Multiple expansion fuels the rally, not earnings.
➡️ Focus: Growth story priced in 12–18 months.
➡️ Challenge: High risk of overvaluation if execution falls short.

2️⃣ Phase 2: Earnings Delivery
- Execution quality, margin durability, and scalability take centre stage. Stocks move with EPS compounding.
➡️ Challenge: Stocks move with EPS compounding; derating risks if performance falters.

3️⃣ Phase 3: Terminal Value Compression
- Growth normalizes, and the market starts questioning "What’s next?" Unless reinvention occurs, multiples compress.
➡️ Focus: Smart money exits, dumb money enters.
➡️ Challenge: Companies must innovate or face stagnation.

- True wealth is built not just by riding Phase X euphoria, but by holding conviction through Phase X and exiting rationally in Phase X.

Designing Your Core Portfolio with This Strategy

X. Phase 1: Valuation Catch-up
- Stocks with sector tailwinds or growth priced in (12–18 months ahead).
Example:
- Waaree Energies: Solar growth driven by policy tailwinds.
- JSW Energy: Capex boost in renewable energy priced in.

X. Phase 2: Earnings Delivery
- Execution, margins, and scalability. Stocks move with EPS compounding.
Example:
- Transrail: Strong order book execution in T&D infrastructure.

X. Phase 3: Terminal Value Compression
- Growth normalizes, market questions "What's next?" and multiples compress.
Example:
- Dixon Technologies: Growth slows as competition rises and government incentives expire, will lead to valuation compression. 

No Buy/Sell recommendation
#StocksInFocus #StocksToWatch #Transrail #waareeenergies #Jswenergy

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XXXXX engagements

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**Related Topics**
[visibility](/topic/visibility)
[stocks](/topic/stocks)
[fomo](/topic/fomo)

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