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Thursday, July 17, 2014

5 Hidden Gems: 5-Baggers in 5 Years Report Update

Dear Member,

We are pleased to inform you that  5 Hidden Gems – Potential 5-Baggers within 5 Years Report Update - Apr'14 has been released by us. Original report 5 Hidden Gems - Potential 5-Baggers within 5 Years was released on 26th July’13 when there was lot of pessimism around the market and we find it as one of the best time to invest in some of the fundamentally strong small cap companies. This report update includes company’s performance, recent updates and development in these companies along with our views and recommendation with buy / sell / hold decisions along with fair price to accumulate any of these stocks.

Since beginning of the year, stock market was in control of bulls with strong positive bias towards Ab ki Baar – Modi Sarkar (this time – Modi led Government) and later stock market further rallied on formation of NDA government. Currently, market are consolidating and any correction would be considering as buying opportunity as long term outlook is bullish for equities. Bear market of last 6 years (since Jan 2008) is already over and equities will continue to outperform all other asset class in coming years.

You will agree that Investment decisions for long term can’t be taken by timing the market movement. It is important to understand the Industry potential, company’s fundamentals and valuations with a long term perspective. We evaluated these stocks with a long term view (2-5 years), we firmly believe that good quality businesses in India will continue to deliver strong double digit growth and its always logical to invest in those businesses which deliver better returns than any other asset class.

Our team published special report 5 Hidden Gems - Potential 5 Baggers within 5 Years with an objective to achieve average annualized returns of 38% each year to achieve 5-Bagger returns in period of 5 years. As illustrated in table below, if these 5 companies generate returns on your investment @ 38% annually, your investment will be 5 fold in period of 5 years. Even if we take conservative scenario considering that only one out of five achieve CAGR of 38% and remaining four delivers CAGR of 20%, your investment will be trebled (3 times) in period of 5 years which is also good compared to returns from other asset classes or major indices - Sensex and Nifty.

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However, our team while selecting these stocks was confident enough to achieve 5 times returns in period of 5 years by monitoring performance of these companies and taking corrective measures in case any of them does not perform up to our expectations.

Few important parameters which have been looked by our equity analysts while finalizing the stock selection are as under: 
  • Market leader in the business / any one segment in which the company is operating in.
  • Scalable business with significant moat (sustainable competitive advantage)
  • Prudent Management with promoters increasing their shares holding in the company 
  • Zero or negligible debt on books with healthy cash flows.
  • CAGR of above 15% with increase in operating and net profit margins in last 5 years.
  • Consistent dividend payment with dividend yield above 2% in last 5 years
  • Increasing EPS, single digit PE ratio with ROE and ROCE above 20% in last 5 years.
  • Zero or negligible share holdings of Institutions (FIIs & DIIs) to get first mover advantage.
Each parameter is equally important and plays a vital role to ensure that you get healthy returns on your investment with limited downside risk in long term. One of the important key to successful investing is to pick the right business at decent valuations. Once you buy shares, you own a part of company’s business. 

We at Saral Gyan recommend good businesses to buy with long term view and any change in our stock views will be based on strong structural trend and not on any short term movement.

We are glad to share that 4 out of 5 Hidden Gems have given astonishing returns in the range of 175% to 350% within first 12 months and our investment made in these stocks have already multiplied by more than 3 times, we have still 4 years left to get our investment multiplied by 5 times which we are sure will be achieved much sooner than later.

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Average returns of our 5 Hidden Gems as on date is 231% compared to Sensex returns of 29% (19748 to 25561) and Small Cap index returns of 85% (5516 to 10193) since 26th July’13, hence our 5 Hidden Gems stocks have outperformed small cap index by 146% and Sensex by whopping 202%.

As Sensex and Nifty are at all time high, we have not suggested aggressive buying in these companies at current levels. But to ensure that we do not miss good investment opportunities, we have suggested initial allocation of 2-3% which can be increased further at suggested levels in the report in case of correction in stock prices.

Note: If you wish to receive our Special Report 5 Hidden Gems : Potential 5-Baggers in 5 Years – Apr’14 update, simply subscribe to Hidden Gems or any of our Hidden Gem combo pack and we will send you the report without any extra charges! To know more about our services and annual subscription charges, click here.

In case of any queries, simply write to us. We will be delighted to assist you!

Wish you happy & Safe Investing!

Team – Saral Gyan
Saral Gyan Capital Services.