Stocks for the long and short term portfolio

[jamit_05]

Most companies run after FIIs, comply their every need. Managements bend over backwards to keep them invested and lobby the government to increase FII%. IDFC, on the other hand, is focussed on growth. The article in an old one. But, the points are still true.

" In order to comply with the new banking license requirements, the infrastructure financier had trimmed Foreign Institutional Investors (FIIs) shareholding from 74 per cent to 54 per cent. Consequently, the stock was removed from the MSCI index resulting in selling pressure in the counter. "

This shows strong commitment by the management. One mind, not many.

 

[shreeux]

No matter what the market, a good value investor would look for good stocks that are at low prices and low PEs. Stocks that have a good management but are in their downcycles or the ones that have not reached their potential. This is important.

If one purchased stocks that are expensive and Nifty were to lose 30% starting september, then expensive stocks will be the first to crash. A value investor has to pay attention to this risk.

This mindset is for investors who are going to make bulk investments. However, if one is going to SIP throughout his career as an investor, then the risk is much lower or even eliminated.

What about buy on dips?

 

[jamit_05]

Why FD/PPF ARE better than TCS at CMP.

There is an essential problem with companies that promise growth: Everybody wants them.

This makes them expensive to the point where they become dull investments. Yet, they are bought to saturation and beyond.

Lets take one such case: TCS

A great company. Its EPS has grown at 27% every year for the past five years. But, this fast growth has attracted way too much investment. As a result, TCS has a very low Earnings Yield of 4%. Now compare it with FDs/PPFs, which give an Earnings Yield of 8.5%. Note, here I am having massive faith in the management to convert the stellar performance in business into strength in share price, Y-o-Y. This line of thought won't apply for JP, Adani and Reliance.

If I invest in TCS now, that would mean I am counting on TCS to continue growth at 27% plus. And logic says that is too much to ask for. In fact, growth has slowed down drastically already. Last years EPS is 97, and current TTM is 104, so only 7% growth. If this growth were to falter below 10%, for whatever reason.... then my investment will lag FDs for the next decade!

However, don't lose heart.

There are other excellent investments which beat FDs from the very start. They also promise impressive safety of capital, modest growth and great management too. One such investment will beat FDs within 5 years, by a factor of two

 

[Joshua R. Mason]

Thank you for the lovely post.

 

[cvas]

Re: Why FD/PPF ARE better than TCS at CMP.

One such investment will beat FDs within 5 years, by a factor of two

is it IDFC?

 

[jamit_05]

Tried very hard to find reasons to buy-in. But, couldn't find sufficiently potent reasons that would beat the tenant : Buy cheap and Hold.

For Missed-out investors like myself, all one can hope for is this:

Markets are bound to correct. Sharply or shallow. Either way, good businesses that have not caught investor fancy, for whatever reason, like Bhel, Cairn, IDFC, will correct deeper.

If they correct 30%, where nifty corrects only 15%. We will find:

Cairn at 2013 lows. Nice price.
IDFC at around 100. A lifetime catch.
Bhel around 160. Decent. But, one must wait-out the downcycle.

There are such gems even in the mid and small cap section. Lets see what the low tides leaves behind.

I don't know about other virtues, but I surely am learning patience.

 

[shreeux]

Jamit_05,

PFIZER and WYETH announced Interim Dividend on 5th Dec'13--- Rs 360/- and 145/-Per Share respectively...If i bought both scripts..can i get dividend....what's your suggestion....

http://goo.gl/I2hqdt

http://goo.gl/6lmcpo

shree you are subscribed to my blog, I thought you might have read the dividend capture strategy you are trying to use, does not work.

The stock will fall by the amount of dividend paid. You will gain the dividend but incur paper loss on your holdings.

Ok, I read your article....this sector was good (there is no sucide mission)...after getting the dividend, the same amount fallen the market, on that time the equal or double the quantity buy on dip and hold...till get the profit...thats why i am asking....

Your suggestion please...thank you...

Today Pfizer and Wyeth breached my holding levels..!!!

Pfizer>>1747>>1366>>1238. (Dividend 360/- Per Share)

Wyeth>>778>>1017>>1023. (Dividend 145/- Per Share)

Reward will get for Patience..!!!

 

[TracerBullet]

Tried very hard to find reasons to buy-in. But, couldn't find sufficiently potent reasons that would beat the tenant : Buy cheap and Hold.

For Missed-out investors like myself, all one can hope for is this:

Markets are bound to correct. Sharply or shallow. Either way, good businesses that have not caught investor fancy, for whatever reason, like Bhel, Cairn, IDFC, will correct deeper.

If they correct 30%, where nifty corrects only 15%. We will find:

Cairn at 2013 lows. Nice price.
IDFC at around 100. A lifetime catch.
Bhel around 160. Decent. But, one must wait-out the downcycle.

There are such gems even in the mid and small cap section. Lets see what the low tides leaves behind.

I don't know about other virtues, but I surely am learning patience.

jamit, what will you do if your intended prices never reach or only reach for very few stocks? I hope you atleast have some equity portfolio now.

I remember you still wanted to wait for earlier lows when IDFC was around 70 and Axis around 700. I understand buying cheap, but IF govt delivers and we are in a multi year bull market are you willing to sit it out?

If modi can implement what he is saying india may transform into a much better country in 5-10 years.
Why not do conservative SIP and add more in corrections rather than just waiting? It may increase your price but for long term investing you will still do good. The risk of waiting outside seems more to me.

Anyway, i dont have as much skill (or rather none for this kind of stuff) as you do but just a suggestion.

 

[TracerBullet]

i think you dont like small caps but anyway would like your opinon if possible.
i got few stock recommendations from a seemingly reliable source who i follow. i m trying to make small equity portfolio (but with most of my investments in MFs)

One company is - Madhucon Project.
It has some roads and power plant funded with quite a bit of debt. Each project has its own debt and they dont overlap. If road is in trouble, power plant should not get affected. Power capacity is expanding as they are close to completing Phase-II and will later start with Phase 3. They also have a coal mine in indonesia which i think they intend to use for a power plant there in future.

Now, he estimates that the current power plant alone is worth around 2k crore after accounting for debt. One trigger is likely listing/stake sale of simhapuri plant in 2015.

The roads are not performing as well as they would want and have high interests on the debt. Even so, they should be worth around 1k crore after debt.

It has run up a bit but still current market cap is ~260 crore. What do you think? There will be some holding discount and simhapuri i think is 90% owned. thanks

 

[schatterjee81]

Hi
I was planning to invest in Adani power and IDFC with a holding period of at least a year .
Any thoughts/advice would be highly appreciated.