Showing posts with label Wealth-Builder. Show all posts

Saturday, November 11, 2023

Are you Investing in Diwali Muhurat Picks of 2023?

Dear Reader,

Saral Gyan Team wishes you Happy & Prosperous Diwali!

Muhurat trading is the auspicious stock market trading for an hour on Diwali (Deepawali). It is a symbolic and old ritual, that has been retained and observed for ages, by the trading community. As Diwali also marks the beginning of the New Year, it is believed that muhurat trading on this day brings in wealth and prosperity throughout the year.

The "muhurat" trading session will be of 60 minutes, to be conducted between 6.15 PM to 7.15 PM on the Diwali day, 12th November 2023 on leading bourses NSE and BSE. The special trading session would be conducted to pay obeisance to Lakshmi, the Hindu goddess of wealth and prosperity. It would also mark the New Year for traders as per the Hindu calendar, or Samvat 2080.

Since last year Diwali day i.e. 24th Oct 2022, Sensex and Nifty have given returns of 9.4% (as on date). The probability of getting similar returns like that of last year in Samvat 2080 is high considering modest inflation with lower interest rate, high credit growth and robust growth outlook.

The future looks bright for Indian equities considering the reforms done by the Govt over last few years. Higher infra spending, incentive linked schemes to encourage investments in various sectors, favorable policies to boost local manufacturing are some of the initiatives which played a major role in supporting economic growth. With pick up in credit growth and rising consumption, we expect the companies from various sectors to report better revenue and profitability over next one year.

We are pleased to inform you that we are in process of selecting 10 scrips from universe of large, mid and small cap stocks which can benefit investors during next 1 year. We are confident that these carefully selected stocks can outperform major indices like Sensex and Nifty during next 12 months.

We will share Diwali Muhurat Portfolio 2023 of 10 stocks on 12th Nov'23 with all our paid subscribers of Hidden Gems, Value Picks & Wealth-Builder under Dussehra Diwali Offer. If you wish to receive our Rs. 1 Lakh Diwali Muhurat Portfolio - 2023 of 10 Stocks, you can subscribe to our services under Dussehra Diwali Offer 2023. To know about the offer, click here.

Our selection process includes lot of research and data analysis. We first identify the sectors that are likely to do well in next 12 months. Having that done, we further refine our search to select companies from that sector. We create a portfolio worth Rs. 1 Lakh comprising 10 stocks so that it can help investors to create a model portfolio with lump sum investment up to 1 Lakh.

We will give different allocation to each of the scrips keeping in mind the risk versus returns ratio. We will also fine tuned the portfolio with large cap, mid-cap and small cap scrips from different sectors so that the investors can invest in a complete mix of stocks to balance their portfolio. Saral Gyan Diwali Muhurat Portfolio of 10 Stocks for 2023 will also include best of Hidden Gems and Value Picks recommended by our equity analyst’s team during last couple of years.

Its time to also review Rs. 1 Lakh Diwali Muhurat Portfolio of 10 stocks of 2022 released by us on 24th Oct 2022. We are pleased to share that our portfolio has outperformed major indices Sensex and Nifty by 39% respectively. Sensex has given returns of 9.4% (59,307 on 24th Oct'22 to 64,905 as on date) during the year where as Saral Gyan Diwali Muhurat Portfolio of 10 stocks have outperformed giving absolute returns of 48.4% in the same period.

Performance update of our Best 10 Diwali Muhurat Stock Picks - 2022

Nine stocks out of ten of our Diwali Muhurat Portfolio of last year have given positive returns in the range of 9% to 260% and only one stock have given negative returns in the range of -28%.

The maximum returns were delivered by two of our Hidden Gem stocks, Cupid is giving as on date returns of 259% and Uni Abex Alloy Products has delivered returns of 208%. Value Picks stocks like Kaveri Seed Company, Natco and TTK Healthcare delivered returns in the range of 30 to 45%. Apex Frozen Foods and Emmbi Industries underperformed delivering returns of -28% and 9% respectively. Our large caps stocks like Mahindra and Mahindra, Tata Steel and HDFC Life also outperformed delivering higher returns compared to Sensex and Nifty.

Note: We will review these stocks and guide our members with buy / sell / hold updates in Diwali Muhurat Portfolio 2023. Our Diwali Muhurat Portfolio 2023 of 10 Stocks will be released on the auspicious day of Diwali i.e. 12th Nov 2023, it will be shared under Hidden Gems / Value Picks / Wealth-Builder service.

We continue to follow our simple but effective approach by evaluating each stock on the basis of below mentioned criteria’s.

(i) Top Quality management with high integrity:

This is an absolutely non-negotiable condition. If the management is not honest, will they want to share the goodies with you? No, they will look for the first opportunity to siphon off the profits and pull the wool over your eyes.

(ii) The scale of opportunity must be big:

Multi-bagger stocks are created because they are able to scale the opportunity rapidly. Titan Industries is a great example. In 2003-04, Titan‘s market cap was 500 crores. In 2023, it is more than 2,85,000 crores. The fact that India is a booming marketplace of 140 crores consumers means that most products and services have a head start at trying to scale up their activities.

(iii) Low debt; free cash flows:

We learnt from the great crisis of 2011 and 2019 that companies with high debt on their books simply get slaughtered. While debt per se is not bad (if the company is able to borrow at a lower rate and deploy it in its business at a higher rate, the operating leverage works in its favour), excessive debt with high interest and repayment obligations can crunch the stock in times of downturn. So, as a long-term investment philosophy, it is best to steer clear of high-debt companies.

(iv) High ROE – Efficient users of capital:

Some company’s management is able to squeeze that little extra of every buck. A ROE of at least 15-20% is necessary to make into the hallowed list of model portfolio.

(v) No High Capex Requirements – No Serial Diluters of Equity:

We know from past experience the demerits of investing in stocks like Suzlon & GMR which have an insatiable appetite for more and more capital. To feed their perennial hunger, these companies dilute their equity by making FPOs, GDRs & FCCBs resulting in total destruction of shareholder's wealth. Companies should be lean and mean requiring minimal capital but generating huge returns there from.

(vi) Reasonable growth expectations:

“If you get a tax-free return of 18% for your portfolio, you must be very happy”. So, stop craving for that overnight multi-bagger. You’ll only end up losing your precious capital that way. Instead, look for well established small, mid and blue chips companies that are growing at a reasonable rate of return (15 – 25%). With time and the magic of compounding, you will have your muti-bagger in your portfolio.

(vii) Valuations:

Most investors are obsessed about valuations, refusing to buy any stock that is “expensive”. However, one must remember that “expensive” is a relative term. If a stock is compounding at 25% on an annual basis, paying a price of 30 times earnings may be very reasonable. A stock like Nestle, for instance, has always been “expensive”. However, if an investor had gone ahead and bought the stock, he would have had an incredible multi-bagger on his hands. On the other hand, in trying to buy a “cheap” stock, one may get saddled with unsavory companies. After all, there is a reason why such stocks are “cheap”.

Of course, one should be careful not to buy in euphoric or bubble times when the pricing may be extravagant and not at all reasonable.

(viii) Concentrated Portfolio:

We like Warren Buffett approach, a believer in the concept of a concentrated portfolio. If you believe in the prospects of a stock you should be prepared to put a substantial chunk of money in it – or nothing at all. There is no point in buying a bit of this and a bit of that because that dilutes your returns.

Of course, we are no match for Warren Buffett and we do not have his conviction levels. So, we’ll stick to 10 stocks to begin with, which means that from 5% to 12% of the wealth will be invested in each stock.

(ix) Diversification:

Last but not the least; a proper portfolio must be diversified across sectors. A bit of Finance, a bit of consumption, some autos, some IT with a pinch of chemical, pharma etc will make a balanced portfolio.

Saral Gyan Diwali Muhurat Portfolio of 10 Stocks will be emailed to all our Hidden Gems, Value Picks and Wealth-Builder members on 12th Nov'23. Portfolio stocks holding period is minimum of one year, same will be evaluated by our analysts next year before Diwali festival.

We are pleased to inform that we are celebrating this festive season by offering maximum benefit to our members. On this auspicious day of Dussehra, you can avail discounts up to 30% and valuable freebies on our subscription services under Saral Gyan Dussehra Diwali Offer. Subscribe to our services and get rewarded by making smart investment decision in equities.

Attractive discounts & valuable freebies which make our offer special for our readers are as under:

1. Discount up to 30% on combo pack subscription (valid up to 20th Nov'23 only)

2. Special Report - 5 Stocks - Potential 5-Bagger in 5 Years Update (Released on 10th Sept'23) - Under HG / WB Subscription

3. Rs. 1 Lakh Diwali Muhurat Portfolio of 10 Stocks (To be Released on 12th Nov'23)

4. Existing Portfolio Health Check Up - Under Wealth-Builder Subscription

5. Hidden Gems Flash Back Report (To be Released in Dec'23) - Under HG subscription

6. Value Picks Flash Back Report (To be Released in Jan'24) - Under VP subscription

Below table indicates subscription services and discounted prices valid up to 20 Nov 2023.

SARAL GYAN SUBSCRIPTION SERVICE	DUSSEHRA DIWALI OFFER ANNUAL SUBSCRIPTION PRICE	PAY VIA CARD (3% CHARGES EXTRA)
Hidden Gems	Rs. ~~15,000~~ 13,500 (10% OFF)	SUBSCRIBE
Value Picks	Rs. ~~10,000~~ 9,000 (10% OFF)	SUBSCRIBE
15% @ 90 Days	Rs. 5,000 (No Discount)	SUBSCRIBE
Wealth-Builder	Rs. ~~30,000~~ 27,000 (10% OFF)	SUBSCRIBE
Combo 1: HG + VP + WB + 15%	Rs. ~~60,000~~ 42,000 (30% OFF)	SUBSCRIBE
Combo 2: HG + VP + 15%	Rs. ~~30,000~~ 24,000 (20% OFF)	SUBSCRIBE
Combo 3: HG + VP	Rs. ~~25,000~~ 21,000 (16% OFF)	SUBSCRIBE
Combo 4: HG + 15%	Rs. ~~20,000~~ 17,500 (12% OFF)	SUBSCRIBE
Combo 5: VP + 15%	Rs. ~~15,000~~ 13,500 (10% OFF)	SUBSCRIBE

There is no combo option for Nano Champs, you need to opt for this service separately.

SUBSCRIPTION OPTION

PAY VIA CARD

(3% CHARGES EXTRA)

Nano Champs– 1 Year - Rs ~~13,000~~ 11,700 (-10%)

Nano Champs– 3 Year - Rs. ~~39,000~~ 33,000 (-15%)

Simply choose the subscription service / combo subscription you would like to opt and click on SUBSCRIBE! link in above table to make online payment using your debit / credit card.

If you wish to invest in fundamentally strong micro, small and mid cap companies which can give you far superior returns compared to major indices like Sensex or Nifty in long term and help you creating wealth, you can join our services like Nano Champs, Hidden Gems, Value Picks & Wealth-Builder.

Wish you happy & safe Investing.

Regards,

Team - Saral Gyan

Tuesday, October 24, 2023

How to Value a Stock - Cheap or Expensive?

Dear Reader,

If you’re new to investing, learning how to choose stocks and investing in the stock market can be overwhelming. Probably the largest mistake that young investors make is to look at the price of a stock as a measure of its worth. In fact, the price of a stock is virtually worthless when trying to value a company.

So what metrics should investors use when evaluating a potential stock investment opportunity? While there are numerous factors to take into consideration, the most popular and well-known metric is known as the price to earnings ratio, or the P/E ratio. But before we get into explaining this ratio, let’s look at why the price of the stock doesn’t tell the whole story.

Stock Prices – Cheap Vs. Expensive

Think about something in your life that you know very well. Maybe you’re obsessed with computer upgrades and performance. You know everything there is to know about computers and when you go to a computer store; when you look at the prices and the specs, you truly know what represents a bargain.

If you were helping a friend pick out a computer, you might tell them that a computer on sale for Rs 20,000 may be a better bargain than a computer on sale for Rs. 18,000. Maybe the Rs. 20,000 computer has a bigger screen, more storage space, and Rs. 5000 of preloaded software on it. With the Rs. 18,000 computer, not only is the hardware pretty shoddy, but there is also no preloaded software, meaning you’ll have to shell out extra money once you buy the computer. You might say “you get more bang for your buck” with the Rs. 20,000 computer. It is this same line of thinking that should be applied to stocks.

Unfortunately, many young investors do not apply the same logic to stock picking. Instead, they look at a Rs. 1800 stock like TCS and call it expensive. So they head to a little known penny stock that is selling for Rs. 0.50 and buy it up like it’s pure gold. The fact of the matter is that if you only have Rs. 1800, there’s a good chance that you’ll make more money purchasing 1 share of TCS rather than 3,600 shares of that cheap company. Why? Because TCS is a much more stable company with not only a proven track record of making investors money, but also strong growth potential.

The P/E Ratio Defined

Now that we’ve fixed the flaw in the young investor’s logic, let’s look at how to measure value. It’s a little more complicated to evaluate stocks than it is to evaluate computers since there are so many different factors involved.

However, there is one metric which, while it doesn’t make up the entire story, offers an important piece of the puzzle when valuing a company: the price/earnings ratio, often referred to as the P/E ratio or P/E multiple. This ratio, while only one of many that sophisticated investors use, is the most popular and discussed ratio in many investment books.

So how does the P/E ratio work? Think of it this way: let’s say you are considering investing in two public companies, both of which are selling for Rs. 200 per share today. One way of deciding which company to invest your money in is examining how much you will need to pay for Rs. 10 of earnings from each company. If last year, Company A earned Rs. 50 per share and Company B earned only Rs. 40 for share, it would intuitively make sense to choose Company A over Company B since it represents a cheaper trading opportunity. Without even realizing it, you’ve made this decision by calculating each company’s P/E ratios.

The P/E ratio is calculated by taking the current price and dividing it by the earnings per share. In the example above, you would take the price of Rs. 200 and divide by Rs. 50 for Company A and Rs. 40 for Company B, yielding ratios of 4x and 5x, respectively. If you’re not good with math, you can also easily find the P/E ratio in the fundamental analysis section of your broker’s research screens for the stock you’re reviewing or on various stock market investment news and research sites.

Disadvantages of the P/E Ratio

While the P/E ratio is a valuable metric for investors, you don’t want to make the mistake of thinking that a P/E ratio alone tells the whole story. Here are the main limitations of the P/E ratio:

1. Healthy P/E ratios may differ between industries: The concept of using a set P/E ratio to determine if a stock is overpriced fails to take into account the individual nature of the underlying company. Stocks in high-growth industries like the technology industry tend to have higher P/E ratios. On the other hand, some industries such as utility companies tend to trade at much lower multiples. Before you can decide if a stock is under or overpriced, you need to take into consideration the industry in which it operates. Continuing with the example above, let’s say Company B was a high-growth tech company forecasted to earn Rs. 100 per share next year and Rs. 150 per share the following year, while Company A was a low-growth oil company that was forecasted to earn Rs. 60 per share next year and Rs. 70 per share the following year. Now that you have a fuller picture of the two companies, it becomes clear that Company B would in fact be the better company to invest in due to its massive growth potential. Company B’s stock price will likely skyrocket if the forecasts are correct, while Company A’s stock price may not budge by much over the next couple of years. Thus, by ignoring other aspects of the company, an investor might have falsely assumed that Company A represented the more valuable stock opportunity.

2. Fails to consider the debt of a company: The price of a stock reflects the equity value of a company. However, it is also important to consider how much debt the company holds. An investor should never ignore a company’s debt position when buying a stock since debt is a strong indicator of a company’s financial health and future.

3. Earnings can be manipulated easily: Clever accountants have a million and one ways to make companies look more attractive. This can involve changing depreciation schedules, using different inventory management strategies, and including non-recurring gains. These strategies are not limited to corrupt organizations, as firms are given some legal flexibility in how they choose to report their earnings. As a result, because companies have an incentive to make earnings look as attractive as possible, P/E ratios can be presented as being artificially low.

4. Growth companies trade at higher P/E ratios: Since P/E ratios represent not only a company’s current financial situation but also it’s future growth potential, growth stocks trade at significantly higher P/E multiples than value companies. Thus, without understanding what type of company you are considering as an investment, you might carelessly overlook some valuable growth companies simply because of their P/E ratios. In fact, some of the biggest winners of all time have been companies with high P/E ratios. According to Investors Business Daily, in a recent analysis, the top 95 companies had an average P/E ratio of 39 before gaining momentum and reaching an average P/E ratio of 87 at their peak. Yet according to the models of most investors who rely solely on P/E ratios, all of these companies would have been ruled out as being overpriced.

5. False assumption that low P/E ratios represent cheap trading opportunities: Many investors assume that a company trading at a P/E ratio must represent great value. As we know, because of many of the factors stated above, low P/E ratios do not necessarily make the best investments. For example, Suzlon was a company that was trading at single digit P/E ratios before it crashed.

P/E ratios are a valuable tool for investors, but they are not sufficient to identify the feasibility of an investment unless used in combination with other metrics and company characteristics.

Regardless of your opinion on the P/E ratio, you should always examine other ratios as well before buying a stock. These metrics, which help investors evaluate other aspects of a company, include Enterprise Value/EBITDA, Enterprise Value/EBIT, Enterprise Value/Revenue, Price/Cash Flow and Price/Book Ratio.

Final Word

The P/E ratio is a great start to understanding a company’s value proposition as a potential investment. With that said, don’t forget that there are many other ratios and factors to consider other than the P/E ratio. The P/E ratio is just one piece of the puzzle. And if you only take one lesson from this post, remember this nugget of information: the price of a stock is not an indicator to identify value of it!

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

Moreover, 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.

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.

Wish you happy & safe Investing!

Regards,
Team - Saral Gyan.

Diwali Muhurat Picks 2023 - 10 Best Stocks of Saral Gyan

Dear Reader,

Since last year Diwali day i.e. 24th Oct 2022, Sensex and Nifty have given returns of 8.9% and 8.6% (as on date) respectively. The probability of getting similar returns like that of last year in Samvat 2080 is high considering modest inflation with lower interest rate, high credit growth and robust growth outlook.

Its time to also review Rs. 1 Lakh Diwali Muhurat Portfolio of 10 stocks of 2022 released by us on 24th Oct 2022. We are pleased to share that our portfolio has outperformed major indices Sensex and Nifty by 30.8% and 31.1% respectively. Sensex has given returns of 8.9% (59,307 on 24th Oct'22 to 64,572 as on date) and Nifty has given 8.6% returns (17,829 on 24th Oct'22 to 19,282 as on date) during the year where as Saral Gyan Diwali Muhurat Portfolio of 10 stocks have outperformed both indices giving absolute returns of 39.7% in same period.

Performance update of our Best 10 Diwali Muhurat Stock Picks - 2022

Nine stocks out of ten of our Diwali Muhurat Portfolio of last year have given positive returns in the range of 7% to 227% and only one stock have given negative returns in the range of -29%.

The maximum returns were delivered by two of our Hidden Gem stocks, Uni Abex Alloy Products has delivered returns of 227.7% followed by Cupid which is giving as on date returns of 122.4%. Value Picks stocks like Kaveri Seed Company, Natco and TTK Healthcare delivered returns in the range of 37 to 39%. Apex Frozen Foods and Emmbi Industries underperformed delivering returns of -29.2% and 7.6% respectively. Our large caps stocks like Mahindra and Mahindra, Tata Steel and HDFC Life also outperformed delivering higher returns compared to Sensex and Nifty.