My top 10 picks

Factors I considered before making this list and then the stock: -

**Rule no.1 is never lose money in stock markets. Rule no.2 is don’t forget rule no.1. **

Its very difficult to identify 3x-4x baggers at the start. If one does that, he in effect is betting on the market to place more value on the stock. Hence, it is necessary to first confirm that atthe buy price, capital is protected. If it turns out to be a 3x-4x bagger, then you can have your cake and eat it to. Also, it is better to keep away from stocks which have too many variables affecting their earnings. For ex, Forex, cyclical nature of input prices, borrowings, launch of new products, etc. Why I say this is because just before any PE rerating is to take place, if any of the factors turn for the worse, the stock gets hammered again.

VST Industries and Nesco straight away make it to the list.

I know for sure they are not going out of business even in the distant future. They will not have much of competition going forward. VST willfetch mearound 6% yield each year in form of dividends and Nesco is sitting on hugeland bank.

Haldyn Glass also makes it to the list simply because of obvious underaluation at current levels. If the promoter can buy 8% stake at R. 16, I am very comfortable buying at Rs. 11.But will wait for some more clarity before further capital allocation. At present level at least my capital is protected.

**IFB Agro **for reasons of undervaluation and sector.

Cera Sanitaryware for its excellent fundamentals.

Mayur Uniquoters )- Enough dissection has already been done onanother thread

Oriental Carbon )- At sub 100 levels, gives enough margin of safety, good growth visibility due to expansion, decent dividend yield.

AVT Natural Products )- I like the business and at current levels of 320 is a good buy

Liberty Phosphate )- Agri Play, Hugely Undervalued and as per Sept 11 results, is now virtually debt free.

Jubilant Industries, Atul Auto, Asahi Songwon Colors, PI Industries, Solar Industries, Wim Plast, Ashiana Housing, make up the balance and are always on theradar for buying oppurtunities.

Comments invited.

reg - Liberty - Can you explain -

  1. Why depreciation has gone down and Fixed assets almost doubled ? Depreciation at 5% of assets seems low.

  2. How has their balance sheet showing 35 cr growth while cash flow has been 22 cr in last 6 months.

  3. it appears subsidies play a large role in margins - perhaps as much of 70% of margins are due to subsidy.

I don’t know much about the company - just saw the Sep results and raising these issues.