Hi Hitesh sir,
I have been silently following and learning from this thread for months now. Thank you so much for sharing your thoughts so candidly. Wanted to get your thoughts on the technical aspect of 1 stock/company:
Rationale for Investment: The company is into specialty chemicals and more process oriented than product oriented, focussing on value-added products including APIs. The company has 2.3x capex planned over this year and I expect sales to go up 3x over the next 2-3 years. Profits should go up 3x at least and 4x in the worst case. The company is grossly undervalued at a P/E of 7 and in an industry (specialty chemicals/APIs) which is growing healthily and has great tailwinds due to value migration from China.
Reason for asking for your guidance: This is a BSE SME company meaning that the least amount one can buy is 2000 shares. This makes it difficult to average up or down and I suspect I would not be able to buy this company again this year. Towards this end, I think using technical analysis to time my entry makes sense since this is a large investment with difficulty in averaging up or down.
Work that I have done: I’ve looked at some simple technical indicators like RSI/stochastic/MACD/Volume etc.
From my limited knowledge, the stock is already near being overbought zone, both as per RSI and stochastic. I understand that broader market risks still apply and specially the smaller/illiquid stocks can plummet in value if the broader market nose dives, but wanted to know your thoughts Hitesh sir about the technical aspects of this stock, and whether the stock patterns seem to suggest more strength/upward move in the rest of the year or consolidation. I understand the risks of the investment but wanted to know based on your experience whether you would enter such a stock immediately or wait for more variables to pan out (Q2 results which would be impacted due to lockdown etc).
Thanks