Stocks for the long and short term portfolio

[jamit_05]

A Re-Look at Union Bank.

Union Bank is not tied to any major Index. Therefore, it is prone to extreme investor-pessimism.

Union				
Shares O/s	596.79			
Year	NP	EPS	Price	PE
2004	712	11.93	76	6.37
2005	719	12.05	113	9.38
2006	675	11.31	122	10.79
2007	845	14.16	104	7.35
2008	1387	23.24	141	6.07
2009	1727	28.94	147	5.08
2010	2075	34.77	293	8.43
2011	2082	34.89	348	9.98
2012	1787	29.94	235	7.85
2013	2158	36.16	218	6.03
2014E		32.94	167	5.08
Potential     32.94	[B]329	[/B]9.98

It is currently trading at 97, it is way below the normal expected price of 167. Such, is the world of investment. Time and again we get stocks for cheap.

But, is it alright to buy at CMP?

Well, Union Bank has made Fresh Low of the current down-leg today, touching the lows of 2008! That is bearish beyond doubt. It means, although Bank Nifty (SBI and Axis) may go up Union is set to go further down... and it won't harm the nation/FM's reputation in anyway since it is not an Index stock.

On the other hand, the price is very good. Whenever, this sector gets back into favour, a year or two later, it is going to massively rally beacuse of one single reason that it is popular for giving dividends consistently and it is fundamentally decent.

 

[jamit_05]

Generally speaking, it feels a little early to start buying because most companies I have researched have shown growth in profits in F.Y.2013! So where is the recession? I would like to see how strongly the junta reacts when the profits take a dip for a few quarters.

I would like to see atleast a 25% dip in EPS from last year before I start SIP. Then the recession will have really started. Then we will really know how low a stock can go.

 

[jamit_05]

Ref: Oilman

BHEL posted a drop of 67% in sales! I suppose this is what Oilman meant when he said that Bhel does not report sales till payment is received.

In that case, its share price deserves to fall the way it did. Will other companies bear a similar fate?

Yes they have. LT, siemens, cummins all saw a fall in sales revenue by a varying degree. Bhel and LT being the biggest losers. LT has decent debt component as well. If this becomes a trend, then times ahead are going to be tough for Cap goods (and hence power sector).

 

[amitrandive]

Amazing Insights from the fundamentals !!!!
Thanks seniors.
:clapping:

 

[jamit_05]

Amazing Insights from the fundamentals !!!!
Thanks seniors.
:clapping:

I don't know how long it will last. I may not have the motivation once my portfolio is in place, unless I get another agenda/perspective.

 

[jamit_05]

Am sharing my outlook as a potential shareholder in a company less discussed:

SRF Ltd.

Background: Its major revenues are from textiles (Industrial Yarn), where I know that the payment has to made within a two weeks. So money moves quick and bad-debts are less.

Its positives:

1) Leadership position: I could safely say that SRF has a leadership position in its market. It has no major entity "Listed" as competitors, which gives a sense of competition being scattered.

It supplies material for tyres and has monopoly in one such area.

2) Huge Entry Barrier: It takes huge investments to set up such units. So, the company's position is secured. I also read that it has RnD facilities and several patents in its name. That is rare for a textile company.

3) Strong Promoter Holding

4) Strong Dividend History

5) Attractive Valuation: Currency deval is hitting cost. It imports 40% of its raw material. This cost is eventually going to be transfered to the buyer. But this will take time. In the mean time the stock is expected to correct or even crash as it is not in the Index. Hence, I like it even more.

6) It is growing. Spending largely in high margin industries. That is good logic.

7) It has a debt component. Given the tough economic scenario, I will want a steeper bargain in the share price. At least 1/10th of all time high!

All in all, I give a thumbs-up but at a much lower price.

 

[rahuld2976]

Am sharing my outlook as a potential shareholder in a company less discussed:

SRF Ltd.

Background: Its major revenues are from textiles (Industrial Yarn), where I know that the payment has to made within a two weeks. So money moves quick and bad-debts are less.

Its positives:

1) Leadership position: I could safely say that SRF has a leadership position in its market. It has no major entity "Listed" as competitors, which gives a sense of competition being scattered.

It supplies material for tyres and has monopoly in one such area.

2) Huge Entry Barrier: It takes huge investments to set up such units. So, the company's position is secured. I also read that it has RnD facilities and several patents in its name. That is rare for a textile company.

3) Strong Promoter Holding

4) Strong Dividend History

5) Attractive Valuation: Currency deval is hitting cost. It imports 40% of its raw material. This cost is eventually going to be transfered to the buyer. But this will take time. In the mean time the stock is expected to correct or even crash as it is not in the Index. Hence, I like it even more.

6) It is growing. Spending largely in high margin industries. That is good logic.

7) It has a debt component. Given the tough economic scenario, I will want a steeper bargain in the share price. At least 1/10th of all time high!

All in all, I give a thumbs-up but at a much lower price.

Hi Amit,

SRF Jan.2009 low is 62.15..

are you expecting that low ?

 

[jamit_05]

Hi Amit,

SRF Jan.2009 low is 62.15..

are you expecting that low ?

It has become a basis for almost 50% of the stocks that I am tracking: To buy good stocks at 2008 Low. (Except a few rock solid businesses like HuL, ITC, HDFC, Oracle Fin Serv and some others where 2011 or 2013 lows will suffice).

There is a logic to it. The trend of falling earnings has started. When this trend settles in there comes a time of panic, where FIIs are convinced that the next quarter will be bad and they are rush to sell at the same time... causing panic This drastically pulls down the PE ratios and decimates share prices across the board.

In that time, it is commonplace to see a 50% fall in share prices in a few months. And that is the distance share prices have to fall to reach 2008!

It may seem too bearish a view, but trust me it will happen because that is what happens when FII start to leave a country... regression by a decade.

My family didn't agree in 2011-12 when I said BHEL will reach sub 100s. Last week it made a low of 100.35! Well, I am still not right, but you get my point.

 

[jamit_05]

Insight on Union Bank:

Irrespective of what returns it may or may not give, it will give the investor a dividend return at par with the prevailing FD rates... with only one difference, this return is going to be TAX FREE!

In other words, you get paid to wait till you get your target price. Sweet ain't it.

 

[Einstein]

in first glance, SRF is going down from about a year mainly because of the higher raw material cost. if you are saying its import most of the raw material then ruppee appreciation will increase the raw material cost and will definitely effects its earnings.

my recommendation, wait for atleast 6 months for SRF and yes price will go more down and it will became more attractive..

2/5