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Sunday, September 30, 2018

Special Report - 6 Hidden Gems Stocks to Buy / Accumulate

Dear Reader,

Since beginning of 2018, we have seen severe correction in broader indices. BSE Small Cap & Nifty Small Cap Index have fallen the most by 28.5% & 36.3% respectively from their all time high made in January this year. Steep fall in broader indices have hurt sentiments and created panic for many of retail investors who got into market last year or during this year. Its important to know, whether you would be able to hold on your equity investments in case stock market tanks further or think to exit? 

Remember, its always wise to be greedy when others are fearful! Fall in stock prices of small cap companies by 40% to 50% from their peaks is normal during panic times, if a particular company delivers 3x to 5x or even 10x type of returns on your investments in period of 2 to 5 years, it has all the rights to fall by 30% to 50% from its 52 week high during tough times which arises due to series of negative news flow and panic across markets. Below are some of the major reasons of continuous downfall in small & mid cap stocks in 2018:

i) Rejig in Portfolio by Mutual Funds to meet guidelines defined by SEBI
ii) Introduction of Additional Surveillance Measures by SEBI to curb volatility   
iii) Auditors exit from various companies on fear of stringent action from authorities   
iv) Unfavourable macros with increasing crude oil prices and depreciating rupee 
v) Trade war fears between US and China, rising interest rates, continuous selling by FIIs
vi) Panic in market due to liquidity concerns, IL&FS default on debt repayments

Its important to understand that long term gains come in equities only if you bear such short term pain. With recent fall in stock prices, small caps valuations are turning attractive to reasonable. In fact, many good companies are available at valuations which look very attractive considering the earning growth these companies are expected to deliver over next 2 years. This is not the time to sell in panic, but to accumulate good companies available at discounted valuations. Moreover, once the markets bottom out and form a base, we can see renewed buying interest in small & mid caps. Bad sentiments will not last for ever, its time for long term investors (2-3 years) to start accumulating good quality stocks which after a long time are becoming available at attractive valuations.

Post recent correction in small cap stocks, we have reviewed all our past recommended Hidden Gems and short-listed 6 Hidden Gems stocks which offer good long term investment opportunity and have potential to give excellent returns on your investment during next 2 – 3 years. 

We will release our "Special Report - 6 Hidden Gems Stocks to Buy / Accumulate" by end of the day today and mail it to our Hidden Gems & Wealth-Builder members.

While short listing these 6 stocks, we evaluated each company on the basis of I-B-M-V-E-D parameters (Industry, Business, Management, Valuations, Earnings Growth & Debt Management) and rated every parameter using a rating scale – E,V,G,F,P (E=Excellent, V=Very Good, G=Good, F=Fair, P=Poor)

One of the important key to successful investing is to pick the right business at decent valuations. We finalized these 6 stocks with a long term view (2-3 years) and find them superior over other Hidden Gems stocks in terms of valuations, earning visibility, debt management and integrity of promoters towards their business and interest of minority shareholders.

These 6 Hidden Gems stocks have a market capital below 600 crores and seen a price correction between 25% to 50% from their 52 week high without any major change in business fundamentals. We believe these stocks will outperform giving much better returns compared to broader indices in medium to long term. Our members can add these stocks in their portfolio with long term view (2 to 3 years). We suggest our members to start investing in these 6 Hidden Gems stocks with initial allocation of 2% and increase allocation gradually to 3-4% in staggered way in case stock prices of these companies falls by another 10% to 20% or more during ongoing market correction.

Important parameters which we looked into while finalizing stocks are as under:

1. Industry – Operating in Industry / sector which is expected to grow > 10% CAGR during next 3 years
2. Business – Leadership position in the business or one of its business segment in certain geography
3. Management – Prudent & trustworthy management keeping interest of minority share holders
4. Valuations – Reasonable / attractive valuations compared to peer group companies
5. Earnings – Consistent past performance & strong earning visibility with planned / recent expansion
6. Debt Management – Company is able to generate cash flows with low or reducing debt on books

If you wish to receive our Special Report - 6 Hidden Gems Stocks to Buy / Accumulate, you can subscribe to our Hidden Gems or Wealth-Builder annual subscription. Click here to know more about our services and discounts available on our combo packs.

If you have patience and want to add extra power in your portfolio, start investing some portion of your savings in fundamentally strong small cap companies - Hidden Gems.

If you have invested in stocks and believe that your investments are not performing well, subscribe to our Wealth-Builder service and get your portfolio reviewed by us. We will review fundamentals of the companies you are holding and guide you which stocks to hold and which to exit. We will also review your equity investments across sectors and companies to ensure that your portfolio allocation is right and outperforms major indices giving you better returns in medium to long term.

The stocks we reveal through Hidden Gems & Value Picks are companies that either under-researched or not covered by other stock brokers and research firms. We keep on updating our members 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 packsclick here for details.

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

Wish you happy & safe Investing.

Team - Saral Gyan