Start making educated investment decisions by investing in Hidden Gems and Value Picks stocks Click here for details.

PAST PERFORMANCE >>> HIDDEN GEMS, VALUE PICKS & WEALTH-BUILDER >>>  VIEW / DOWNLOAD

SERVICES:        HIDDEN GEMS    |    VALUE PICKS    |    15% @ 90 DAYS    |    WEALTH-BUILDER

SUBSCRIPTION:        FREE SUBSCRIPTION      |      PAID SUBSCRIPTION     |      PAYMENT OPTIONS

Wednesday, May 7, 2014

30 Hidden Gems (Small Cap Stocks) - SIP Returns @ 82.6%

Power of Investing in Small Caps 

On 2 January 2002, Crompton Greaves had a market cap of Rs 115 crore and its stock was at Rs 1.80. Today, on 07th May'14 the stock price closed at Rs 169 and the company's market cap is Rs 10,611 crore. Rs 1 lakh invested Crompton Greaves in Jan 2002 is worth Rs. 92 lakh today. 

It has been one of the wealth creators in the Indian stock market which has given almost 50 percent annualized return to investors over the last 12 years. 

Lets take another example of little known company Mayur Uniquoters which is our 5-Bagger stock. We recommended this stock 2 years back at price of Rs. 56 (adjusted price after 2 bonus issues and stock split in last 2 years, actual recommended price was Rs. 448) and today it’s at Rs. 305. In fact, its a 100-Bagger stock for investors who invested in it 5 years back. Company has posted strong growth YoY and rewarded share holders in big way, Company was trading at Rs. 3 (bonus / split adjusted price) with market cap of merely 13 crores in 2009, today market cap of the company is 1,300 crores and company has paid total dividend of Rs. 9.25 during 2013 which is 3 times of its share price in 2009. Company is still a great value stock considering its consistent performance and leadership position in artificial leather industry and robust demand for its products by esteemed clients from auto and footwear industry. 

Do you own such stocks which can give you similar returns in future?

The number of small-cap stocks is large and finding a quality stock that can give high returns over a long period is tough even for equity analysts. One reason is that such stocks usually have a short history and are not tracked by many analysts and brokerage houses. Then there are risks such as low liquidity, governance concerns and competition from larger players.

Scores of once small companies have over the years grown big, giving investors a 30-50 per cent annual return over 10-15 years and creating fortunes for investors. However, more often than not, we find ourselves at the wrong side of the fence and regret our inability to spot such stocks on time.

Those who wish to invest in small-cap stocks should do so only if they have a long investment horizon and tolerance for volatility. Small-cap stocks suffer the steepest falls in a bear market and rise the most in a bull market. An investor should stay invested for at least three-five years to allow their portfolio to gain from at least one bull run.

Benefits of Investing in Small Caps

1. Huge growth potential: The first and the most important advantage that a small cap stock gives you is their high growth potential. Since these are small companies they have great scope to rise as opposed to already large companies.

2. Low Valuations: Usually small cap stocks are available at lower valuations compared to mid & large caps. Hence, if you invest in good small cap companies at initial stage and wait for couple of years,  you will see price appreciation not only because of growth in top line and bottom line but also due to rerating which happens with increase in market capital of the company.

3. Early Entrance Advantage: Most of the fund house and institutions do not own small caps with low market cap due to less liquidity which make it difficult for them to own sufficient no. of shares. This gives retail investors an opportunity to be an early entrant to accumulate such companies shares. When company grows in market cap by delivering consistent growth and becomes more liquid, entry of fund houses and institutions push the share prices up giving maximum gains to early entrants.  

4. Under–Researched: Small cap stocks are often given the least attention by the analysts who are more interested in the large companies. Hence, they are often under - recognized and could be under-priced thus giving the investor the opportunity to benefit from these low prices.

5. Emerging Sectors: In a developing economy where there are several new business models and sectors emerging, the opportunity to pick new leaders can be hugely beneficial. Also the disruptive models in the new age is leading to more churn and faster growth amongst the nimble footed smaller companies.

Concerns while Investing in Small Caps

1. Risk: The first and the most important disadvantage a small cap stock is the high level of risk it exposes an investor to. If a small cap company has the potential to rise quickly, it even has the potential to fall. Owing to its small size, it may not be able to sustain itself thereby leading the investor into great loses. After all, the bigger the company, the harder it is for it to fall.

2. Volatility: Small cap stocks are also more volatile as compared to large cap stocks. This is mainly because they have limited reserves against hard times. Also, it in the event of an economic crisis or any change in the company administration could lead to investors dis-investing thereby leading to a fall in prices.

3. Liquidity: Since investing in small cap stocks is mainly a decision depending upon one’s ability to undertake risk, a small cap stock can often become illiquid. Hence, one shouldn’t depend upon them for an important life goal.

4. Lack of information: As opposed to a large cap company, the analysts do not spend enough time studying the small cap companies. Hence, there isn’t enough information available to the investor so that he can study the company and decide about it future prospects.

Saral Gyan team do take care of above concerns by doing indepth research and analysis of small cap companies before releasing research reports with buy recommendation. Its sincere efforts, dedication and passion of our equity analysts that 10 out of 30 Hidden Gems released by our equity analysts have given more than 100% returns to our members.  If you have patience and want to add extra power in your portfolio, start investing some portion of your savings in fundamentally strong small companies - Hidden Gems

We always suggest salaried employees as well as businessmen / entrepreneurs to invest via SIP (Systematic Investment Plan) route. Simply get some savings from your monthly income and Invest in equities for long term. SIP not only allows you to save every month in a disciplined way but also help you ride through ups and downs of stock market.

Invest some portion of your monthly income in good companies without  timing the stock market and you will definitely get rewarded in long run.

Just take care of Basic Principle of Investing in Equities:

1. Invest in stock market with a long term view (3 - 7 years or more).
2. Invest in companies which are fundamentally strong with scalable business.
3. Follow disciplined approach by Investing regularly in equities.
4. Build a diversified portfolio by investing in small & mid cap companies.
5. Avoid frequent buying / selling of stocks, Its trading not Investing!
6. Review performance of your holding companies at least once a year to decide whether to buy / sell or hold.

Lets review how SIP approach have benefited our Hidden Gems members during last 3.5 years. Below is the table which illustrates value of Rs. 10,000 invested (every month) in Hidden Gems (Unexplored Multibagger Small Cap Stocks) vis a vis value of Rs. 10,000 invested in BSE Small Cap Index during last 3.5 years.

(Click on the image if not visible)

We are delighted to share that average returns of Saral Gyan Hidden Gems (30 stocks) during last 3.5 years is 82.6% compared to 3.2% of BSE Small Cap Index. Investment of Rs. 10,000 in Hidden Gems during last 3.5 years not only allowed you to save Rs. 3 lakh but also appreciated your investment giving overall profit of Rs. 2.48 lakh, making your total Hidden Gems stocks portfolio of Rs. 5.48 lakh. However, if you invested the same amount in Small Cap Index, you would be sitting with an marginal gains of Rs. 9,662.

In fact, actual returns of Hidden Gems are much higher as we suggested partial / full profit booking at higher levels in many of our Hidden Gems like Camlin Fine Chemicals, WPIL, De Nora Ltd, Cravatex, SAB TN Ltd etc and exit in few of non performing companies like National Plastic, Sumedha Fiscal, Puneet Resins etc. 11 Hidden Gems out of 30 during last 3.5 years have given more than 100% returns to our members, we are hopeful that we will continue to hunt best Hidden Gems from universe of small caps by doing authentic, in-depth and unbiased research work and support our members to make educated investment decision.

Best Hidden Gems which our team picked early and still suggesting our members to continue to hold in their portfolio includes Cera Sanitaryware (Our 8 Bagger - returns @ 683%),  Mayur Uniquoter (Our 5 Bagger - returns @ 449%), Camlin Fine Sciences (Our 4 Bagger - returns @ 369%) and Wim Plast (Our 3 Bagger - returns @ 244%). We may not advice our members to get into these stocks at current levels considering the recent run up seen in stock prices of small and mid cap companies but would continue to suggest to hold them for long term considering growth potential and strong fundamentals of these companies. 

Through Hidden Gems and Value Picks, we're providing you opportunities to invest in such small / mid caps stocks today. Infosys, Pantaloon, Dabur, Glenmark were the small cap stocks in past and today are the well known companies falling under mid and large cap space.

The stocks we reveal through Hidden Gems & Value Picks are companies that are either under-researched or not covered by other stock brokers and research firms. We keep on updating our subscribers on our past recommendation suggesting them whether to hold / buy or sell stocks on the basis of company's performance and future outlook.

Subscribe to Hidden Gems & Value Picks and start investing systematically. Avail attractive discounts by subscribing to our combo packs, click here for details. 

Do contact us in case of any queries, we will be delighted to assist you.

Wish you happy & safe Investing.


Regards,
Team - Saral Gyan.