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Monday, June 6, 2022

Special Report - 5 Stocks - Potential 5-Baggers in 5 Years

Dear Member,

Over last 6 months, Sensex and Nifty have corrected by more than 15% from all time high, whereas there is more pain in broader markets. BSE mid cap and small cap index has witnessed fall of more than 20% from their peak. However, stock prices of many small and mid size companies are down by 30 to 60 percent from their peak of 2021 and seems reasonably to attractively valued post severe sell off by FIIS over last 8 months.

Looking at the current scenario with concerns related to high inflation and rising crude oil prices, market may correct by another few percentage points. However, this is a good opportunity to buy good companies at discounted prices. If you are a long term investor, you must avoid timing the market and consider recent correction to buy and accumulate fundamentally strong companies available at cheap to reasonable valuations to get rewarded in the long term.

We are pleased to share that we have released our Special Report - 5 Stocks – Potential 5-Baggers in 5 Years report on 29th May 2022 and shared with our active members of Hidden Gems, Value Picks and Wealth-Builder service. In this report, we have included small size companies having market capital of less than 500 crores (with one exception). These companies offer good earning visibility over a period of next 2 to 5 years. We have performed a detailed analysis to identify the sectors and the companies operating in that sector to finalize our 5 stock picks under this special report. This report includes company’s background, recent updates with our views and recommendations.

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 any other asset classes like Fixed Deposits, Real Estate, Metals – Gold / Silver or even major indices - Sensex and Nifty.

Investment of 5 lakhs in 5 Years at CAGR of 38%
However, our team while selecting these stocks is 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 
  • Low / manageable debt on books with healthy cash flows.
  • CAGR of above 15% with increase in operating and net profit margins in last 3 / 5 / 10 years.
  • Consistent dividend payment with expected increase in dividend payout in coming years
  • Growing EPS, low PE ratio with increasing ROE and ROCE over last 5 years.
  • Low 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 inform you that our last 2 releases of our Special Report – 5 Stocks - Potential 5-Baggers in 5 Years have delivered decent returns for our members. We usually release our special reports when market give us good opportunity to make lump sum investments. Later, we review our picks based on yearly performance of these companies and take corrective measures by guiding our members in case of exit from a particular company or switching from one company to another. We released our last 2 reports on 05th Jun 2016 (update released on Aug 2017 and Jan 2018) and 30 July 2019. We are glad to inform you that our 2 stocks out of 10 have already delivered more than 5-Bagger returns and another 3 stocks have delivered 2X to 4X returns within period of 5 years. Below is the performance update: 
There were few laggards as well like CARE Ratings, Repco Homes, Somany Ceramics, Som Distilleries etc in which either we suggested our members to exit and invest in other stocks or are still holding them. 

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 businesses with high earning visibility and strong fundamentals continue to command premium compared to peer group companies. Its always logical to invest in those businesses which deliver better returns than any other asset class.

Note: If you wish to receive our Special Report 5 Stocks : Potential 5-Baggers in 5 Years (released on 29th May 2022), simply subscribe to Hidden GemsWealth-BuilderValue Picks or any of our combo packs and we will send you the report without any extra charges! We have shared this report with all our existing subscribers of Hidden GemsWealth-Builder and Value Picks.

Below are the details of our services:

1. Hidden Gems (Unexplored Multibagger Small Cap Stocks): Based on fundamental analysis, our equity analysts release one Hidden Gem research report every month with buy recommendation and share it with all Hidden Gems members. Stock finalized as Hidden Gem belongs to small / micro caps space with market cap of less than 500 Crores, expected returns from Hidden Gems is in the range of 80% in period of 12 - 24 months. Once target is achieved, we inform our members whether they should continue to hold the stock or need to do partial / full profit booking. If fundamentals are intact and valuations are reasonable, we suggest to continue to hold the stock for long term for multibagger returns. Annual subscription charge of Hidden Gems is INR 14,000 10,000 under which you will receive 8 to 12 Hidden Gems research reports over a period of one year. You will also receive our special reports (based on market conditions or stock specific opportunities), Diwali Muhurat Portfolio etc without any additional charges,  Click here to read more about Hidden Gems.

2. Value Picks (Mid Caps with Plenty of Upside Potential): Our equity analysts team consider Warren Buffet approach to short list stocks from mid cap segment as Value Picks. Market cap of Value Pick will range from 1000 crores to 10,000 crores. Holding period of Value Picks is 12 - 24 months and one can expect returns of 40-60%. Annual subscription charge of Value Picks is INR 8,000 6,000 under which you will receive total 8 to 12 Value Picks research reports over a period of one year You will also receive our special reports (based on market conditions or stock specific opportunities), Diwali Muhurat Portfolio etc without any additional chargesClick here to read more about Value Picks.

3. 15% @ 90 Days (Buy to Sell Stocks for Short Term Gain): Based on technical analysis, our team recommends one stock every month to our members. It’s a short term call under which you can expect returns of 15% within period of 90 Days. Annual subscription charge of 15% @ 90 Days is INR 4,000 under which you will receive  10 to 12 stock recommendations over a period of one year. We suggest lower allocation in 15% @ 90 Days stocks and higher allocation in Hidden Gems and Value Picks which are our portfolio stocks based on fundamental analysis.​ 15% @ 90 Days stocks recommendations are based on buy to sell and gain strategy, hence we suggest our members to book complete profits once target is achieved and exit in case target is not achieved or stock has broken its 2nd support level as per reportClick here to read more about 15% @ 90 Days.

4. Wealth-Builder (An Offline Portfolio Management Service): Wealth-Builder is our model portfolio of Rs. 10 lakhs and currently we are holding 15 stocks in our portfolio. We suggest higher allocation in our Wealth-Builder stocks which includes best of our Hidden Gems and Value Picks released during last couple of years. Our team suggest all our Wealth-Builder members to invest in the stocks which are part of our Wealth-Builder portfolio. Every month our team updates our Wealth-Builder members which stocks they need to buy / sell / hold with % allocation of these stocks in their portfolio, the suggested changes need to be replicated in the same proportion. Annual subscription charge of Wealth-Builder is INR 28,000 20,000 under which you will receive total 10-15 portfolio updates. We also review existing equity portfolio of our members and advise them which stocks to hold and which to exit based of fundamental analysis under Wealth-Builder service. Our Wealth-Builder service is suitable for those investors who have an existing portfolio of at least 2 to 3 lakhs or planning to invest similar amount or more in equity market. Click here to read more about Wealth-Builder.

We do update our members in terms of profit booking / exits depending upon various factors like overall Industry / Sector outlook, fundamentals of the company, management action plan and annual performance in terms of top line, bottom line, operating margins and other important parameters.

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

Team - Saral Gyan