We are delighted to share that 2 out of 6 small cap stocks which we recommended to our paid subscribers during last 6 months are up by almost 40%. Average returns of our recommended Hidden Gems (small cap stocks) during last 6 months is 14% compared to negative returns of -11% of small cap index.
We firmly believe that the stock which we recommended as Hidden Gems in December last year is a strong multibagger candidate and can give exponential returns in next 2 years. Currently the scrip is up by almost 40% from our recommended price but still seems to be highly undervalued and offers an excellent investment opportunity.
The small cap stock which we recommended in Dec 2010 recently declared 20% dividend and dividend yield at CMP is above 4.5%. In fact, company declared fantastic numbers in Q4 of FY 2010-11. Stock is trading at a price to earning (P/E) ratio of 3 which makes the stock highly undervalued when compared to its peers. Investing your savings in such a company seems to be very promising considering domestic demand driven consumption story in India. Moreover, company operating margins are better than other known players in the same segment.
Promoters increased their share holding significantly in last 2 years taking their stake above 70%. Earning per share is doubled in last 3 quarters and to reward shareholders, company declared dividend of Rs. 2 per share. With dividend yield of 4.5% and strong operating margins, stock is having limited downside risk in case of stock market correction.
Small Cap index is down by almost 12% since December 2010 but stock price of this company has appreciated by almost 40% during the same period. After analyzing Q4 results of FY 2010-11, Saral Gyan equity analysts have only one opinion about this company i.e. A True Multibagger Stock!
Investing in small cap can be risky but such companies can create real wealth for you. Great advantage which only small cap companies offer is benefit of early entry. Retail investors can enter in such stocks before institutional investors and fund houses. We have many recent examples like TTK Prestige, Symphony Systems, VIP Industries and Relaxo Footwears where real price appreciation is stock price came after entry of big players.
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