Stocks for the long and short term portfolio

[jamit_05]

I suggest accumulation IDBI Bank for Long term holding. Can be a min. 5X bagger in 5 years.

Sure, the price is cheap. The reason for it is, its ROA is 0.60% where as its NPA is 1.6%. This means, the company will lose around 3 years of its entire annual earnings just to cover the NPAs.

It is cheap and may even get cheaper.

 

[jamit_05]

Jamit

If I ask you 2 stocks.... . Just 2..... Best fundamentals and best price right now, which 2 will you chose?

What is the objective? To make bulk investment or SIP?

If SIP then options are many. If Bulk then we are hard pressed for choices.

 

[jshah9]

Amit-

from the list you have posted earlier in this thread in which companies we can start SIP ?

Thx,

 

[shreeux]

What is the objective? To make bulk investment or SIP?

If SIP then options are many. If Bulk then we are hard pressed for choices.

Which scripts to buy on dips and accumulate...?

 

[jamit_05]

I have a clear recommendation for the method of investing ones capital.

Firstly, an investor should make a "Base". One needs to ensure that the bulk of his capital has a special edge, an extra safety. So that his journey as an investor is set on solid grounds. This will happen if he buys in a sharp volatile correction, which the market have not shown since 2008 meltdown.

In a meltdown, the cyclical stocks will touch unimaginable prices. Whereas, the good stocks, which are having sustained growth, more or less, like HDFCBank, Gruh, Cipla, Axis, etc will be available at a 25% discount. In this scenario, one can liquidate all extra cash and/or assets and reallocate this bulk.

Once, this base is set he could buy quantities at corrections like we saw in the last month and half.

On the other hand, if one buys bulk in minor corrections, he is very likely setting himself up for a heartbreak as this minor could turn into a meltdown.

I am saying this, keeping in mind the shortcomings of the mentality of an investor. Pros argue that if one buys near book value or properly estimated DCF price all will be well in the long run. But hey! mind knows this but not the heart.

Regards,
Amit

 

[jamit_05]

This is not the time to make the Bulk investment. However, if one is already past this phase and wants to SIP then he may as the quantity will be small at these corrective rates. From that perspective, the following are the stocks that are trading attractively.

Energy:
Gujrat Gas
Coal India
Petronet
Gail

Banks:
HDFCBANK
SBI

Stalwarts: Cipla, IDFC

Cyclicals: Metals, Cap Goods, Auto and Ancillaries.
I'd wait for a much deeper correction and buy in accumulated bulks as these stocks are going to be in a sustained downcycle for some more time. Quaterlies say so.

 

[stockman]

Amit, You have been recommending greaves cotton as growth stock & say that it's a good long term bet.. I jus checked out & have couple of questions over it..

1.The PE of GC is close to 18 whereas the avg industry PE is far less than 15.. Is it not expensive?
2. There is no significant improvement in their quarterly results (for the past 4 quarters)?
3. How do you say that the stock/company will have good growth going forward?

What's your say?

 

[jamit_05]

Amit, You have been recommending greaves cotton as growth stock & say that it's a good long term bet.. I jus checked out & have couple of questions over it..

1.The PE of GC is close to 18 whereas the avg industry PE is far less than 15.. Is it not expensive?
2. There is no significant improvement in their quarterly results (for the past 4 quarters)?
3. How do you say that the stock/company will have good growth going forward?

What's your say?

Yes, GC is very well managed company. The board of directors are wise. Hence, it is a very good long term bet. And yes, there is still plenty of growth left, which will show in the long run.

However, the sector is cyclical. Currently it is in a phase of down-cycle, much like all other companies in its sector of capital-goods, infra, power.

This is not a perennial stock, like Cipla, TCS or Infy where one can expect growth year after year.

Now the questions:

1) PE is average at 10. However, for small caps like GC one is better off looking at the fundamentals like Free Cash Flow, steady to growing revenues, sustained NPM etc as opposed PE or DCF.

2) It is commendable that it is even sustaining the numbers in these tough times. Kudos to the management as it didn't fall for debt driven expansion.

3) It is well positioned due to its diversity. It makes engines, power and construction equipment. And its business is closely connected to the overall economy. So, when the Indian Economy gets buzzing, GC will register noticeable growth in EPS. Till then, be greedy for a lower price of purchase.

 

[jamit_05]

Markets give a sharp correction, like Nifty touching 52W lows, once or twice in a decade. That is the ideal time to make bulk investment. This will get you started as a long term investor. Then on, keep adding to your investments on sensible corrections.

If this doesn't make you a crore-pati... I don't know what will.

PS: You gotta be a lakh-pati to start with.

 

[jain.er]

Hi Amit,

what do you think of the below strategy to buy a blue chip...

Sometime it happens that we want to buy a good blue chip stock for long term/mid term holding but we feel that it has run up too much and will buy when it corrects but that correction never comes and stock keeps on running like Sun pharma, Lupin, TCS etc...

SO the strategy is buy 25% to 50% of your target investment in the stock any time or at some minor dip and now if the the stock keeps on moving your investment has been perfect and you enjoy the profits but if the market corrects then buy more of the stock this will enable you to buy at your desired levels. Only caution one needs to exercise that their should not be any fundamental downgrade in the stock leading to price correction.