i)TVS Motor Company-
ii)Everest Industries
iii)HIL Limited
iv)Sesa Sterlite
v)Mphasis Ltd.
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I will write about my reasons explaining why theabove mentioned five picks have good prospect in long term in the next post.
I also like Mphasis, I think they should be able to grow their non HP revenues in the long-run.
TVS Motors, exceptional management, BMW association should help. Have not looked at valuations recently.
Do you think operating margins pressure to recede in asbestos sheet industry? Not sure, if it is a structural trend, that OPM has come down significantly in the last 1-year.
If someone has to choose only one between HIL and Everest, which one would you prefer and what could be the rational?
Other than** Mphasis and Sesa sterlite** which are available at **attractive valuations **one can wait for an opportunity to buy the other three on decline;as there has been considerable run up short term correction can not be ruled out.However from a_ longer term perspective prospects look good._
In case of** Mphasis **which seeks to boost its businessother than from parent Hewlett-Packard it no way changes the shareholding oh HP.They have made several acquisitions since 2002.To me it looks like a temporary problem.
Sesa Sterlite India’s largest Zinc & Aluminum producer has been subdued due to mining ban and related issues ,with a little change in Govt. policies inrelevantsectors this company can realize its true potential.
It’s hard to differentiate between HIL & Everest but if someone has to choose only one Everest seems to have better growth prospects & more** export oriented.**
Interesting picks.
I was reading an report and they mentioned cyclicals would do well. I ran a screener with Trailing PE > 20 and Mcap to Sales < 1 and Debt to Equity < 1
It had HIL, Everest Industries, TVS motors.
I randomly choose PE > 20). I usually have a check on Mcap to Sales ratio and debt to equity.
As Peter Lynch says** ''Never invest in any idea you can’t illustrate with acrayon**." while statistics provide great basis for understanding but having an explanation why a particular company will do well is necessary.
yourvariables look good ;while many of the good companies tend to quote a high price to earning ratio but there’s a inherent risk in buying high PE stocks.one important factor to be taken into account is ‘Quality of the Management’ which is hard to explain on the basis of numbers .Most of the mentioned companies would easily pass the "**management test’’;**please correct me if I am wrong.
Another important issue is **"long operating history’’ **if the company has been able to survive and grow in the past it gives me confidence.
While choosing stocks many of us try to figure out the probability of how the story will unfold for a particular company;and I personally believe this is the right way of choosing stocks.
As I have mentioned earlier some of these stocks had considerable run up andbuyingon decline would provide a margin of safety.
N.B. I have rudimentary knowledge when it comes to investing and would highly appreciatepointingout’ the mistakes ormisjudgments.
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While the real estate sector India is facing problems a major reason being ‘the pricing’ a company like Everest Industries seems to be better poised for the future as they cater to the Rural Housing sector and aims to become a complete building solutions provider.
Everest Industries Rural Housing sector
I would appreciate any one points out facts that would prove my points wrong,that will be helpful in the learning process
< 1 and Debt to Equity < 1
It had HIL, Everest Industries, TVS motors.
I randomly choose PE > 20).
While the other variables look good I am personally not in favour of High PE stocks .I also believe Cyclicals will of course do well the only question is when?Regression to Mean is a very strong concept.
I have lost money in asbestos stocks about 4 years ago. They had good numbers, no debt, OK dividends etc. On top Jhunjunwala and Damani had owned these shares. I found that there is little appetite for these asbestos stocks due to regulatory risks. Asbestos is carcinogenic substance regardless of what these companies say in their annual reports. All over the world these products are banned.
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My five pick for long term with very high growth potential…
- Beta drug… oncology products
- ASM technology… semiconductor technology, great management
- Add shop e retail… ayurvedic products, FMCG, nutritional, animal feed, new plant, new products, expansion on.
- Bajaj Healthcare…api, formulations, world no 1 producer of ascorbic acid n chlorhexidine. 6 manufacturing units.
- Sirca paint… Italian paint technology, agressive expansion of distribution network.
Some common feature of above stocks…
- Business understandable/ sustainable
- Good business model with better future prospects ahead.
- Microcap size
- Quality stocks
- Low/negligible debt with reasonable valuations
- Relatively less known
- Nil/low FII/DII holding
- High promotor holding
- Profit making company with good dividend yield
- Progressive company
Views and comments invited.
Disclaimer…my portfolio stock n planning to add on dip.
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My picks are on the more predictable/boring side:
- Divi’s Labs - superior margin profile versus peers, and capex largely done with. They’re also better in terms of vertical integration, and are relatively less effected by raw material price fluctuations.
- HDFC Life - I’m buoyed by management commentary where they’ve been stressing for the past year that they’re no longer having to make a pitch to customers for insurance products. Again a high growth opportunity and a company that follows solid governance practices.
- Tata Consumer - Stagnant international business but India business is going strong. I think Sunil D’Souza is amongst the best people you can have to run that business and he will take it to new heights. Furthermore I’m convinced that as per capita income grows, coffee consumption per capita too will grow ie Starbucks will go from strength to strength.
- HCL Tech - It was and continues to be available to investors at a steep discount to TCS, Infy, Wipro, and while there are concerns with respect to the products business I believe they will still be able to grow earnings at 13-15% for the next 5 years.
- Tube Investments of India - I’m hopeful of a revival in private investment in India that will revive the Capex cycle. If this happens CG Power will do extremely well and I’m confident that Murugappa group and Vellayan Subbaiah will make good use of the cash flows. With TI you get exposure to several quality businesses and management with a solid plan (TI1,2,3).
Views and comments are invited.
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Interesting thread. I thought to do this activity to refine my own thinking of the stocks I already hold and also which ones I have stronger conviction for long term among them and I should increase allocation on an opportunity…so here my list goes (probably in order of conviction) -
- Tata Consumer - A story of long runway, excellent Promoters, kind of a turnaround (low to high margins)…in short a very small FMCG company from a giant group in India…
- Retail - A combination of Trent + Dmart + Spencer in ratio of 70:20:10. If I were to chose only 1, it would be Trent - A fashion/beauty smallcap (considering Nykaa mcap and also relative size of the Tata group). Dmart is another beast of a business and a masterpiece of execution…Spencer would be an undervalued turnaround bet left for a positive surprise, if any…
- Pidilite + Asian Paints in ratio of 70:30 … The most simultaneous consumer & economy facing businesses. Icing on cake is their strong market dominance. For couple decades, they have had no match and I am not seeing any significant match except these two themselves moving into each other’s adjacencies here and there.
- United Spirits + United Breweries in ratio of 70:30 …both MNCs owned by best business houses in the world and a bet on the huge runway & turnaround of the way industry is perceived by consumers and how it operates in India vis-a-vis globally
- Nestle India - Unique franshisee in the areas it is present. Dominant player, high margin already. Bet is on urban part of India gradually expanding to rural as it is predominantly an urban India franchisee at present…
Disc: Invested in all above names & highly biased. This is no buy/sell recommendation. Post only for academic purposes and I can be completely wrong in all my assessments. Recent transactions in last 30 days as well.
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How about valuations?
Dont you think asian paints,dmart are highly overvalued according to there earnings?
Yes they are and they have every right to be. These are buy on dips/crashes/opportunities businesses. If they were undervalued, I would have probably sold rest of my portfolio in a jerk to add these.
Point is, will we ever get them reasonably valued unless a strong company specific headwind or market crashes? I think even during March 20 crash, these were not undervalued as per valuation standards of most.
An interesting thought - When I can pay Rs 10,000 extra for a Rs 50,000 Sony TV as compared to the second best and even Rs 25,000 extra as compared to a lower quality company (thats a 25 - 100% premium on valuation) on a depreciating asset, why should I shy away from paying a premium for a best quality appreciating asset… (that is if one considers Sony a best quality brand in TV and intends to use the TV with proper care and for long term)
Disc: Same as above. View personal and only for academic purposes. I can be wrong in all my assessments.
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Congratulations @IndependentEqu_ for identifying so many multibaggers in 2014.
My picks would be
- CDSL in capital markets
- Tata Elxsi in IT software
- Tata Consumer in fmcg
- Dmart in retail
- Borosil in consumer durables
All have good growth prospects and strong balance sheet.
Disclosure: I am invested in all of them.
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can you share more details on why you chose Borosil in consumer durables among so many good names - Voltas, Whirlpool, Blue star, Hitachi AC (all white goods) and Havells, bajaj electricals, TTK Prestige (small appliances player also)…etc.
I selected Borosil over others due to growth and management quality. Their support for employees during covid shows their commitment for sustainability and long term thinking.
Other companies with high growth in consumer durable sector I am interested in are Dixon, Amber and Stove Kraft.
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WHAT makes you interesting about trent ?
In retail why not vmart or aditya birla fashion ?
I think the question is directed to @Investor_No_1.
If I have to select between these companies, I would also prefer Trent due to Tata group promoter.