There can be no better alternative to stocks which are sector leaders and are available at very attractive valuations. Not very often we get opportunities where the market leaders are trading at discount to their intrinsic values. InvestorZclub has compiled a list of stocks which are leader in the sector they operate in but are available at the bottom range of the historical valuation due significant fall in stock prices.
The stocks listed in the above table are significantly down from their five year high and are trading at very attractive valuations. The 5 year high and low prices have been adjusted for splits and bonuses.
Take the case of Hindalco. It is the largest copper and aluminium producer in India. The stock at current market price is trading at 35 percent discount to the forward year book value. ICICI Bank, the largest private sector bank is down 42% from 5 year high and is trading at less than 1.5 times forward year book.
If an investor's horizon is 2 years plus, then one can start accumulating above shares gradually and sit tight for next two years. Each of the above stocks have the potential to deliver in excess of 50% return in two years time frame.
The logic makes no sense. There are so many other stocks which are trading below there 5 year. Do they all become BUY candidate. Check Suzlon etc... Don't you think just price can not be the reason to buy a stock. Reliance is in Bad shape it may go down further 20%ReplyDelete
You are correct "Mr. Anonymous" that many stocks are trading at 5 year low. But not all stocks becomes a buy just for that reason.ReplyDelete
The above post consist of sector leaders in Sensex and Nifty which are significantly away from their 5 year high. These are among the largest companies of India and they are just going through a corrective phase along with the market.
Historically the leaders come back when situation turns favourably. If you pay heed to what all stock are listed above, you will find that each of the above are industry leader and belong to respectable managment group.
Yes they can fall another 10 or 20 percent that is why buying into these stocks should be done in a staggered fashion and the holding period should be minimum 2 years.
Suzlon is a dead story. Recently it came out of MSCI global index as well. I think suzlon is no longer a large cap and has serious balance sheet issue. So it is not a buy even at single digit levels until the business fundamentals change considerably.
Hello Amit Agarwal,ReplyDelete
Great compilation. Eye opener & very good guider for persons like me.