Stocks I hold and love
I checked my stock portfolio few days back, and to my joy found that it was out of red now. I like trading in stocks, but I do not trade very regularly. And as a rule, I buy stocks only with long term horizon - min 1 year. I tried intraday trading too, and made some profit, but felt it was too small to merit the time and effort that goes into it. Further, I trade / invest with very small capital base, comprising of my own savings, thus the proportionate margin given by my broker is small too.
Warren Buffet said: Buy high, sell higher!! Though I do not strictly adhere to this maxim, I do not really mind buying a stock I like or have faith in even if it is trading high. There are often times when I find myself with some ideal cash, and I go on buying spree. Since such occassions are not very frequent, I usually go ahead and buy regardless of the direction market is moving in. Another reason for investing without considering the direction in market is moving is that since I invest for long run, unless I make a very poor selection, I have a good chance of getting decent, if not spectacular return on my investment. So far the strategy has worked well for me. During the recent market crash, I, like many others, have been putting in as much money as I can into the market, primarily to lower the average cost of shares I held already, and also to benefit from the opportunity.
Here, I present to you some of the stocks in which I have been increasingly my holding regularly for quite some time now, and in turn, these have given me good returns so far. I do hold several other stocks as well, but these ones have showed highest returns since I first invested in them.
1. Tata Motors: This is one company which, at the moment, needs no introduction. Launch of Nano - the cheapest car in the world is one of the most talked about events in the whole world. The stock has seen many ups and downs in last 2-3 years. There was a time when stock was steadily going up, and then fell sharply in 2008, partly due to recession and partly due to the trouble it had got itself into with acquisition of Land Rover Jaguar. Its debt had soared, and sales had not kept up. There were talks that the company was not able to pay its suppliers on time. However, it seems to have got its act together. Since March this year the stock has been steadily climbing up, and I feel confident that in days to come it is going to give good returns.
2. Binani Cement: This one is a subsidiary of Binani Industry Ltd. From a high price of Rs. 110+ in Jan 2008, the stock has fallen shraply in 2008 and started picking up from march this year. It is now trading at around Rs. 50. Since the stock has been constantly fluctuating, but I think it offers good returns for both long term investors as well as short term / intra day trders.
3. Burnpur Cement: This stock has been taking a beating of late. Its operations are primarily limited to eastern India, and thus suffers from some vulnerabilities which could be avoided with a national presence. In July last year it was trading at a high of Rs 21, from where it went as low as below Rs. 8 in Oct last year. It has since recovered and is trading at Rs 13.
4. Alka Securities: This is one of the penny stocks which is at its peak price at the moment, and profit booking is recommended, though I am still not going to sell off my holdings yet. In July Last year the stock was trading at below Rs 10, and saw its lowest point in Oct when it was trading at arnd Rs 8. Since then the stock has recovered significantly and is now trading at the highest price in last 4-5 years!!
5. Gateway Distriparks: Gateway Distriparks is involved in Container Freight Stations and Inland Container Depot Operations. This business has grown significantly in last half decade or so, and despite slowdown, promises to be big in coming years. India traditionally has not been known for efficient CFS, and Gateway seems set to change this notion. The company has several subsidiaries involved in handling various container related services in different states of India. All this recession did not seem to affect this one company, and its margins remained strong. Interestingly, the company's stock not only has recovered any beating it took in market in past year, but has also exceeded the price at which it was trading a year back. With EPS of 6.55 and PE of 14.43, the stock seems to have good potential for days to come.
6. Cairn India: Very High PE at 63.60, low EPS at 3.65, is it time to book profit on this stock? In July last year the stock saw a high of Rs. 280+, and since then it fell sharply to just above 100. It is now trading at around 230. The company is involved in oil and gas exploration and production. This is a complex business and valuation of assets is very difficult in such business as it is based on oil and gas reserve that the company claims to have found. At the moment Cairn has two significant producing assets:
1st at CB/OS-2 in the Cambay Basin, off the Gujarat coast in western India; and
2nd at Ravva, located in the Krishna-Godavari Basin in the Bay of Bengal, off the Andhra Pradesh coastline.
Those willing to take some risk might consider holding on to the stock and see which way it moves. I, for one, am not selling it just now.
7. Essel Propack: At one point of time few years back, Essel Propack was touted as the largest producer of laminate collapsible and plastic tubes used primarily for packaging of toothpaste, cosmetics, pharmaceuticals, household and industrial products. Since then the company seemed to fall off the radar. In last couple of years Essel Propack has made some international acquisitions and has expanded its operations internationally. It now has units operating in countries like United States, Mexico, Colombia, United Kingdom, Poland, Germany, Egypt, Russia, China, Philippines, Singapore, Indonesia and ofcourse India. Since Dec 04, profits of Essel went down significantly in 05 and 06, but showed signs of recovery in 07. In dec 08 company showed decent profits once again and should be able to keep its margins high now. Though the stock has seen quite a lot of fluctuation in the last year, I believe it is a good investment for long term.
8. Dabur India: The name usually brings to mind an old slow moving company which is happy with marketing the few blockbuster products it has. Such companies are known as dinosaurs and tend to be over whelmed by competition in current age. But not this one. In last few years Dabur has got its act together, hived off divisions which it felt were holding the company back, and has employed both organic and inorganic route for growth. It already has several block buster products under its belt, and it has been gettin increasingly agressive in marketing these products and introducing new ones. It has also entered new businesses, including retail. Its stock is currently trading at PE of 25+, and has EPS is Rs. 4.50. I think this stock makes for an excellent investment opportunity, though high PE ratio is bit of a concern.
9. Marico: Uncommon Sense. Thats how this company introduced itself when it came for Pre-placement talks at our campus. It showed some clippings about how uncommon sense makes a lot of sense not only in our daily life, but also in business. It the went on to talk about its practices, strategies and how the company has been using uncommon sense to grow in leaps and bounds. All in all, I felt it was a pretty good presentation, much different from all the boring presentations other companies show where they cannot stop yapping about themselves.
In last few years this company has expanded operations significantly and set up subsidiaries in several nations. It has diversified its businesses and aquired sevral new company both in India and abroad. Though PE for Marico is slightly high at 22+, and EPS is 3.10, I personally think investing in this stock makes lots of (uncommon) sense.
10. Balrampur Chini Mills: Balrampur Chini Mills, or balchi, as I like to call it, is primarily known for its sugar mills. It has nine mills with aggregate rushing capacity of more than 70,000 tons per day. It's allied business consists of manufacturing and marketing of ethyl alcohol and ethanol, generation and selling of power and manufacturing and marketing of organic manure. Balchi operates in four segments, which includes sugar, distillery, co-generation and organic manure. The Company’s subsidiaries include Indo Gulf Industries Ltd (IGIL) and Balrampur Overseas Pvt. Ltd. Balchi's stock rose to its height in 2006, after which it has not been able to perform as well, probably due to overall bad performance of sugar industry in India. However, since end of 2008 the stock has been going upwards and I expect good returns from this in times to come.
11. Alka India: This one is my personal favorite. Alka India is India's own true blue penny stock which rarely trades above Re 1. It touched Rs. 2.5 in 2005, and then Rs 2 briefly in 2007-08, but since then fell down to its usual level of below Re 1. It is presently trading at Rs. 0.50+.
When I have purchased some shares and have to make payment to my online tading account, I normally pay in round numbers i.e. if the amount outstanding is Rs. 95, I tranfer Rs 100 and buy Alka India with the surplus amount transferred. In this manner I have accumulated quite a lot of this stock, but my average holding cost is around Rs. 0.30. Thus I dont think I am doing too badly with this one :)
12. Mudra Lifestyle: Mudra Lifestyle is an integrated textile manufacturing company. Around Aug 2008 this stock was trading at its peak of around Rs 40. At present it is trading at Rs 25+ with a PE of about 6 and its EPS is 4.49. It operates in single segment only, which is textile products.
13. Air Deccan: Since its takeover by Kingfisher, the stock's name is changed to Kingfisher Airlines Ltd. But for some strange reason, it still shows as Air Deccan in my online trading account. This is one stock which I bought as an opportunist, at a time when it was taking heavy beating. After all, when a stock is at its lowest, the only way it can go is up. Right? Though I have not sold any part of my holding till now, it is showing good returns should I choose to liquidate my holding in this stock.
14. Vinay Cements: As the name suggests, this is a cement producing company. Operaions of Vinay Cements is limited ot Eastern India, where it has a very strong market hold. It has several subsidiaries which also operate primarily in Eastern India only. Except for a very brief fall in Oct 2008, this stock has been rising steadily for past several years. The first time I bought this stock it was trading at below Rs 10, and since then I have been steadily increasing my holding of this particular stock.
While picking up a stock I do not use some scientific method or calculation. I simply read financial news regularly, see which stocks have low PE at the time of buying, and which ones belongs to industries which have good outlook in long term. And ofcourse, the kind of debt it is in. My methods might sound pretty basic, but has served me well for the last 8 years that I have been trading.
However, I would like your feedback and comments on what do you think of my investment strategy and the stocks I have mentioned here.