- 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
- Manageable 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 1% in last 5 years
- Increasing EPS, low PE ratio with ROE and ROCE above 20% in last 5 years.
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.
Lets review the performance of these 5 stocks in first 12 months against major indices Sensex and Nifty. Below table indicates the performance of our Potential 5-Bagger stocks during 1st year. We reviewed these stocks in 3rd issue of our Special Report released on 05 Jun'16 and below is the performance update as on 5th Jun'16 along with suggested action.
Below is the as on date performance of our Potential 5-Bagger stocks since release of our 3rd issue on 05 Jun'16 and since release of 2nd issue on 03 May'15.
Moreover, our potential 5-Bagger stock picks have given average returns of 48.1% as on date against Sensex returns of 0.5% (27011 - 27145) and Nifty returns of 1.8% (8181 - 8328) during last one year since 3rd May 2015, hence outperformed Sensex and Nifty by 47.6% and 46.3% respectively. One out of our five 5-Bagger stocks have not performed up to our expectations giving negative returns as indicated in table above. Remaining ones have performed much better outperforming all major indices in last 12 months.
As target of 5 times returns was almost achieved within 2 years, our Special Report Update was made publicly available.
In beginning of 2016, with lot of pessimism building around equity market globally, we have seen a severe correction in Indian equities during Jan and Feb with major indices - Sensex and Nifty falling by more than 24% from all times high made in March last year. If we look into broader markets, stock prices of many mid and small cap companies have seen a steep fall in the range of 30% to 50% or even more in first 2 months of 2016. In such situation every investor looking to create wealth is confused whether to exit, hold or enter the stocks and at what levels to enter or exit.
However in last 4 months, we have witnessed strong rally on positive global as well as local cues. Factors like positive Union budget with focus on fiscal discipline, change in Fed views regarding US rate hike, stability in commodity prices and positive news on above monsoon forecast helped major indices, Sensex and Nifty to rise by more than 20% from their recent lows made in last week of Feb this year.
However, if you are a long term investor, you must avoid timing the market and invest systematically. Any severe downfall in market must be to start accumulating high quality companies with strong fundamentals to get rewarded in long term.
In an effort to ensure that our members get rewarded getting better returns on their investments in medium to long term by investing in good quality small and mid cap companies, we published our 2nd Issue of Special Report - Potential 5 Baggers in 5 Years on 3rd May 2015. After reviewing these 5 companies based on their performances in last financial year and to take corrective action, we have released 3rd Issue of Special Report 5 Stocks: Potential 5-Baggers in 5 Years Update on 05th June 2016.
If you wish to receive 3rd issue of our Special Report 5 Stocks : Potential 5-Baggers in 5 Years Update (released on 05th June'16), simply subscribe to Hidden Gems, Wealth-Builder, Value Picks or any of our Combo Packs and we will send you the report without any extra charges!
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IMP Note: Hidden Gem and Value Pick report of June 2016 is still not released and will be released by 2nd / 3rd weekend of this month.
Wish you happy & Safe Investing!
Team – Saral Gyan