Investing is all about study, research, conviction and patience.
These traits can help you navigate even the high tides on Dalal Street.Despite the recent selloff in midcap and smallcap stocks, those who held on such high-conviction ideas are sitting on healthy profits.Take this: Indiabulls Ventures, Graphite India and HEG have created enormous wealth for investors over the past three years.
The stocks are currently hovering around their all-time high levels.An investment of Rs 1 lakh in HEG or Indiabulls Ventures on August 17, 2015 would have become nearly Rs 24 lakh on August 17, 2018.
Graphite India would have converted the same investment into Rs 15 lakh in the same period.Graphite electrode maker HEG recently reported a net profit of Rs 770 crore for June quarter after reporting Rs 8.43 crore loss for the same quarter a year ago.
Graphite electrodes are used to melt scrap in electric arc furnaces (EAFs) to produce new steel.
Brokerage firm SKP Securities is still bullish on HEG with a target price of Rs 6,122.Industry consolidation/capacity closures globally, environmental clampdown in China and rapid reversal of demand-supply equilibrium due to a rise in EAFs have created an unprecedented windfall, taking the graphite electrodes industry structurally into a sustainable higher orbit of profitability, the brokerage said.Global brokerage firm Macquarie recently maintained an outperform rating on Graphite India with a target price of Rs 1,410.
Macquarie estimates an EPS growth of 270 per cent in FY19 from the company.
Indiabulls Ventures posted 95 per cent year-on-year rise in consolidated net profit at Rs 87.72 crore for June quarter compared with Rs 44.99 crore reported for the corresponding quarter last year.Indiabulls Ventures overall AUM is close to around Rs 6,500 crore, whereas the companys market-cap is close to Rs 30,000 crore.
The growth opportunity could be close to 90 per cent earnings growth CAGR over next two years, Abhimanyu Sofat, VP- Research, IIFL, said in an interaction with ETNow earlier this month.That might warrant a positive view on Indiabulls Venture.
Otherwise, we need to watch how the quarterly numbers shape up, he saidIndiabulls Integrated Services multiplied investor wealth by 45 times over past three years.
The scrip jumped from Rs 12.20 on August 17, 2015 to Rs 559.70 on August 17, 2018.
It means an investment of Rs 1 lakh in the stock three years back would have become over Rs 45 lakh today.
There are other stocks too, which have turned an investment of Rs 1 lakh into over Rs 10 lakh in three years.
Among them are Olectra Greentech, NR Agarwal Industries, Maha Rashtra Apex Corporation, Yuken India, Agri-Tech (India), Soril Infra Resources, Phillips Carbon Black, Minda Industries and Goa Carbon, to name a few.Edelweiss Investment Research has a buy rating on Phillips Carbon Black with a target price of Rs 328.
The company is expected to be a major beneficiary of tyre investments in India and ASEAN region, which coupled with tightness in global demand-supply situation, is likely to keep contribution margins high for rubber carbon black, Edelweiss said in a report.Brokerages are also bullish on Minda Industries post Q1 earnings.
The auto component maker posted a 77.46 per cent rise in June quarter consolidated net profit at Rs 80.50 crore compared with Rs 45.36 crore reported for the same period of last financial year.
Nirmal Bang Securities has a buy call on Minda Industries (MIL) with a target price of Rs 440.
We expect Minda Industries top line to grow at a CAGR of 28 per cent over FY18-FY20E led by consolidation of group companies under MIL, product innovation, growing customer base and upcoming ventures.With better capacity utilisation and benefit of operating leverage, we expect Ebidta margins to inch upwards to 12.8 per cent in FY20E from 11.9 per cent in FY18, supporting 28 per cent earnings growth CAGR over FY18-20E, the brokerage said.Tickle your grey cells21 Aug, 2018 Stock valuation and price targets can sometimes put the best of analysts to test.
Market's dynamic nature only makes sure they remain on their toes.James Valentine, the founder of AnalystSolutions, has a code.
He suggests 11 thumb rules when it comes to equity valuations and setting price targets.His underlying theme is as straight as it can be: Keep it simple.Avoid complexity21 Aug, 2018 We dont want to be doing rocket science here, says Valentine.
Complexity is not our friend The more complex, the more likely somethings going to go wrong.Derive an accurate forecast21 Aug, 2018Accurate forecasts are an outcome of subtle application of skills and tools, according to Valentine.
What factors steered the stock in the past What is going to drive the stock in future Skills are a must to answer those questions.
Spotting fishy behaviour and getting a grip on market sentiment are vital for successful equity analysis.Focus on 1-4 critical factors per stock21 Aug, 2018 This rule boils down to answering two questions, according to Valentine.
Which factors are going to move my stocks and where can I get unique insights on these factorsDont seek out-of-consensus ideas from company management21 Aug, 2018 The best analysts are finding unique sources of information, Valentine says.
"Company management does not qualify as unique."When he covered stocks, Valentine reached out to industry consultants and managers of privately held companies for their perspectives.
The less I spoke to my companies, the more successful I got, he says.