INSUBCONTINENT EXCLUSIVE:
Stock picking turned difficult this year thanks to strong volatility in the domestic equity market
Market participants look undecided whether to go with a technical or fundamental view.
But how about going with the combination of the two
CAN SLIM does exactly that to identify potential value stocks
investment system based on the study of historical multibagger price runs in stocks
seven common characteristics
inception four years ago, the MarketSmith India model portfolio based on CAN SLIM has grown around 111 per cent between June 1, 2014 and
The Nifty has gained over 40 per cent during the same period
It tends to work well in a directional market
Like any other strategy, it too has its pros and cons
CAN SLIM may not do very well in a choppy market
CANSLIM workCAN SLIM is a guideline where each letter stands for an important factor that needs to be considered before investing in a
greatest stock market winners of the past were all trying something new
Look for heavy volume accumulation by institutional investors, particularly at key moments like when the stock is breaking above prior
performance, and are in leading industry groups
Every bull market has a new leader and there is no point getting stuck with stocks that belong to the lagging industry groups
SponsorshipMutual funds, banks and other professional investors are big players who drive the market
For a stock to be a top performer, it must have institutional support to fuel its price moves
DirectionStudies have shown that three out of every four stocks follow the current market trend
You should always trade in sync with the market
rules-based system helps identify stocks with the right fundamental profile to succeed
Once the stock passes this litmus test, one needs to look out for a breakout from a sound base pattern
Base patterns are periods of sideways movement where the stock has less buying interest
No stock can be in a rally forever, even multibaggers have periods of consolidation and we must wait for the stocks to breakout to new highs
before we take any fresh position
A rules-based system helps us nail down fundamentally strong growth stocks, and then we wait for the technical buy signal, i.e
all investors regardless of whether they are first-timers or experienced investing professionals need to learn sound, historically proven
buy rules as well as sell rules.
Singhi says CAN SLIM strategy is tailored for investors looking to beat the market by investing in stocks
with high quality fundamentals
The aim of the system is to capture big price runs by buying fundamentally strong stocks that are market leaders
CAN SLIM modelWilliam O'Neil India shared a list of 10 stocks based on the CAN SLIM model with ETMarkets.com.
Asian Paints: Organised paint
companies are likely to get benefitted from increasing population and housing shortages in India, which will drive growth for residential
construction industry (expected to grow at 15 per cent during the period 2018-2022)
Nestle India: The revival of its major brand Maggi (60 per cent market share) and new product launches (40 new products over the past two
years across various segments) helping the company to substantiate its position in the market
Moreover, the reducing material cost helping Nestle in expanding its margin
The deflationary price trend in Q1 2018 (-11 per cent YoY) for skimmed milk powder continues to prevail owing to an excess supply leading to
a decline in prices by Rs 4-10 per litre
Coffee prices also continue to decline 4 per cent YoY as of H1 2018, reaching the low recorded in 2014
said Singhi.
Maruti Suzuki: Maruti Suzuki is the largest passenger vehicle company in India by sales
The management is confident about its future prospects and expects to sell 2 million vehicles by FY2020
VIP Industries: The company manufactures a wide range of hard-sided and soft-sided luggage under the VIP, Skybags, Alfa, Aristocrat,
Carlton, and Caprese brands
The company reported five consecutive quarters of high double-digit EPS growth
It is expected to grow further on the back of its capacity expansions in Bangladesh, where it currently enjoys a tax holiday of seven years
Moreover, aggressive brand promotion, growth in the aviation industry, and wider retail network add more revenue prospects for the
Company.
Britannia Industries: This company drives its growth through its capacity expansion plan, new product introductions, and geographic
In addition, the goods and services tax has brought the unorganised sector (25 per cent of biscuit market) under the tax net, helping the
company gain 170bps of market share in the Hindi-speaking belt, where it faces intense competition from regional players
It reported three consecutive quarters of double-digit earnings growth and two consecutive quarters of double-digit revenue
growth.
Edelweiss Financial Services: Edelweiss has delivered industry leading growth with its credit book growing to Rs 42,010 crore in FY
2018 from Rs 3,956 crore in FY 2012, implying a CAGR of 48.3 per cent
The company achieved this growth while maintaining healthy net interest margins (7.7 per cent in FY 2018) and robust asset quality with net
NPA at 0.7 per cent, at the end of FY 2018.
KEI Industries: This is a cable manufacturing company involved in the manufacturing and supply
of power cables and other industrial cables
It aims to boost its B2C business and increase its distribution channel to 1,500 by FY 2019 from 926 dealers in FY 2016
Moreover, it also increased its advertising budget to reach to a wider audience
service provider with a pan-India presence, headquartered in Bengaluru
It has 65 offices across India in 34 cities along with overseas footprints in North America, the Middle East, and Southeast Asia
The stock posted double-digit sales and EPS growth over the last three years
Quess Corp is also tapping into the smart city project in Ahmedabad by entering into a joint venture with Trimax IT Infrastructure and
As a part of the project, it aims to create digital, communication, and information infrastructure.
Tata Elxsi: It is one of the leading
providers of technology and designing services for product engineering solutions to the automotive, broadcast and communication, and health
The company largely thrives on RD spends by global companies
It is the second-largest private lender by assets with a focus on rural and semi-urban markets
Its asset quality remains top-notch thanks to stringent credit origination practices, strong monitoring system, and adequate
provisioning.
Along with increased digitisation, the bank is also expanding its presence in rural and semi-urban areas, which are largely
Among the total number of branches, 53 per cent of the total bank outlets are in semi-urban and rural locations
The expansion strengthens its retail segment, which is highly dependent on SME and unsecured lending
The share of unsecured lending and SME continues to trend higher; recorded at 47.6 per cent in FY 2018 compared with 40.8 per cent in FY
