The performances of growth and value styles tend to rotate, in other words, value stocks usually exhibit strong performance after the stock market has peaked. Following the growth-led rally, the value theme seems to be catching up. Experts say these style shifts usually last a few years, and that's why there is still steam left in value stocks. Adding to this is the ongoing structural economic shift.
Traditionally, consumption and services stocks were considered growth stocks whereas manufacturing and utilities were value picks. The recent revival in the manufacturing segment, due to government initiatives like the production linked incentive, is changing this. We list below 10 value stocks that are worth investing in now. These companies are trading at reasonable valuations and could offer decent returns.
Note that this data is based on an article dated Sep 6, and data as on Sep 2, Most of its loans are to government entities and, therefore, are as good as risk-free. However, the stock has underperformed the market and NBFC sector in the past one year because of the slower than expected resolution of a few of its stressed private sector assets. Any resolution of these private assets will result in a re-rating. Execution misses due to the second covid wave and increase in freight costs resulted in subdued numbers for Q1 of Though this caused a correction in August this year, experts continue favoring Kalpataru.
As of now, these are the focus areas of the government and therefore, are expected to report healthy growth in the coming years. National Mineral Development Corporation NMDC is one of the players from the metals and mining space that gained from the uptick in metal prices. The first quarter net profit shot up by five times year-on-year. Global iron ore prices have cooled off in the past two months but this will not dampen the prospects of NMDC. With steel prices remaining high, iron ore prices should also stabilise in the coming quarters.
Therefore, it will be able to manage the price fluctuations smoothly. The company is also targeting its demerger and divestment after commissioning. Gail operates a gas pipeline network of more than 12, km and is also participating in city gas distribution business. The gas transmission volume is already above pre-covid levels and the same is expected to pick up further as the economy recovers. Gas trading margin is also expected to improve in the coming quarters due to the prevailing high spot LNG prices.
Also read: National Monetisation Pipeline good news for infra sector: 10 stocks with high potential upside. Though coal-based thermal power generation remains at its core, NTPC is transforming itself into a renewable energy company. Around 3GW of renewable capacities are under construction and may get commissioned over the next two years. It is also experimenting with new technologies including green hydrogen and manufacturing methanol.
The cash flows from thermal projects are expected to help NTPC achieve its renewable energy ambition. Tata Steel is a global steel company, with operations across the world. The recent uptick in global steel prices has boosted its fortunes. Tata Steel generated a consolidated free cash flow of Rs 3, crore during the first quarter of It reduced debt by around Rs 25, crore during and may reduce the same amount in Since the Tata Steel share has already reacted to the rise in steel prices, should investors go for it now?
Yes, experts say. Value investing is a strategy of investment which consists of choosing those stocks that appear to have their current stock value much lesser than the book or intrinsic value. Investors ought to value investing hunt for these undervalued stocks. The value investors have a strong belief that the stock prices are affected much more than they should have due to the movement. This change in the price will not have a long-term bearing on the company as they will start performing well in the coming days.
When that happens, the stock price will shoot up, giving investors with excellent returns. The overreaction of the share price will provide a good opportunity for investors to pile up value stocks. The primary idea of value investing in simple and straightforward. If a value investor is of the opinion that a particular stock is undervalued due to the market movements, then they will invest in it without a second thought.
They go on to accumulate these stocks and hold them for a long period to make good profits. When there is a sale on a popular online platform, people will rush to buy the best mobile phone as they know that they are going to get it at a discounted price. It makes sense to buy the phone at the discounted price as you know that the actual price of the phone is much more than what you have paid.
Similarly, it makes sense to buy stocks at a much lower price. Therefore, value investing is a process of finding out stocks that are undervalued and buying them at a much lower price and holding them until they gain and provide excellent returns. Value investing is an excellent investment strategy. It involves picking up stocks at a much lower price and staying invested over the long-term to reap benefits.
This needs market knowledge and the ability to analyse the fundamentals of the company and its profitability in future. Annual turnover - In lacs. GST registered.
Higher the promoters shareholding in the company, the more positive signal it sends out to the market. In general, the promoters shareholding in the company may vary over the past many years. However, if the promoters are increasing their stake in the company, it means that they have trust in the company, making it a good company to invest in.
If you have reached this step, that means you have narrowed down upon a few stocks to invest in. The only question that remains is what is the right price to buy them? Buying at the right price would give you that margin of safety, protecting your investment from any downside risks. Often this right price is the price that is way below the intrinsic value of the stock i.
When the stock is available at such a deep discount bargain to its intrinsic value in the market, you grab it immediately. This way you are buying the stock very cheap while increasing the chances of generating great returns in the future. For example, one of the stock that I bought was the Indian Bank. It was trading in the range of Rs 70 to But, its actual worth i. That was a great time to grab the stock and people who did so, including me, made good money as the stock hit Rs in less than one year.
One of the best way to calculate the intrinsic value of the stock is through the Discounted cash flow model DCF. I will not say that the intrinsic value estimated by this formula is absolutely perfect. But for newbie investors, it will give a fair idea about the true value of stocks. Here, I have taken number of years as 4 as I have data only for the past 4 years as seen in the above picture. Ideally, you should take the number of years as 5. Secondly, we are using the growth rate of the last 5 years to arrive at the future growth rate G.
You can also think that the future growth G may not be the same as its last 5 years growth rate. This way you get a range of the Intrinsic Value i. Now, if the stock is not available at a cheap price, continue to monitor the stock so that when the opportunity arrives you can load it up immediately.
Note: One should not buy stocks on the basis of this formula alone as it would lead to errors and losses. Please always check the true value of stocks by using fundamental analysis tools like the DCF model and then cross verify using this formula. You would like to read — Best discount broker in India. Portfolio Construction is nothing but building a basket of stocks and allocating a certain percentage of your total investable amount to each of them.
There are many investors who chose either of the approaches depending upon their capital allocation strategy and succeed. In my opinion, I would recommend the second approach — i. I would even suggest to just focus on investing in 5 stocks initially and with experience slowly move up to 10 stocks. The simple reason being, with the diversified approach it becomes difficult to keep track of a large number of stocks and difficult to control risk during bad markets.
But with the concentrated approach — tracking the stocks, reviewing the underlying business periodically, and controlling risk is relatively easier. Also, the concentrated approach is suitable for wealth creation while the diversified approach is suitable for wealth preservation. I suggest you build a small number of high-quality stocks that derive maximum portfolio value. On the capital allocation strategy, you can start small by building a portfolio of Rs 10, first.
Also, once you start investing and your portfolio starts appreciating, you need to allocate accordingly keeping in view the present value of your portfolio. Some of the best investors in India and around the world come from very humble and normal academic backgrounds. For starters, take the help of this article to kick-start your journey of investing in stocks.
If you Loved reading this, Share with someone you care! I share transparently how I am making passive income from multiple sources online. Although there may be many such articles out there, yours was promoted by Google, good SEO work there! I am going through your video, and I must say, I am very impressed. I will definitely take the time to go through the entire article thoroughly. Very well curated. Explained in easy words. Liked the way you have structed the entire investing process.
Thanks for sharing these tips, really helpful. Query on valuation models. The company will have some amount of free cashflows each year. You need to take that while using DCF. Extract Amrit -Nectar for Investors is dished out by you. A very well explained article. Thank you.
Which was the screener that you shown in Indian Bank details explanation? Good information for beginners, I am sure a lot of people would have benefitted from this well explained article. Just a small question, could you please explain how you ended up with 0.
It would be of much help. Hope you reply soon! Thanks in advance! Stepwise calculation — Subtracting one from 1. Thankyou Sir, this is exactly what i have been looking for. I am glad I came to know about your blogs and read it. You explained everything in layman terms and I am gonna use these in my investing journey. This article is really good and helpful.
This article helped a lot and I know now where to start. I am into crypto scalping and I managed to earn good profit provided the fact I touched with zero base knowledge but I followed my intuition. My excitement rose as I continued to read this article.
Signs of a good one. Will definitely utilise the advice available here. Really you provided good information… Initially i was thinking on trading… but after reading your article now i am thinking seriously on value investing….
CAGR denotes the performance of the stock or investment over a period of time. Hats up to you sir……becoz your way of explanation is very much understanding, using a simple language and anybody can understand it in easier way…. Very well explained, thanks for your great assistance to beginners. Also requesting you to provide the website details from where you acquired above snapshots. A very lucid and helpful article without many promotion links. Please continue your good efforts.
Step-by-Step and Actionable. This Article is very useful for the people who do not know anything and just wants to invest with knowledge of Brokers and known people. Hi, this is really very nice blog, your content is very interesting and engaging, worth reading it. I got to know a lot from your posts. Very good article. I want to select 10 stocks using your approach and invest like sip for 5 years.
Pl give your advice. Thank you Pradeep. No one has explained investment basics this better. I have been reading this continuously for the last 2 hrs and no where i found it difficult to understand. Thanks a ton to help the beginners. Thank you so much for giving such a useful treasure specially for beginners who are struggling to understand the concept.
Nice article, but how many people woll have such technical knowledge to analyse, and also stock market behaviour is not in you hands. With lot of fraud companies which sebi cant recognise and insiders, investing in stocks is risky. Also the raise in sensex or nifty will not match with ones portfolio, why they are not concentrating only 50 ot companies to calculate nifty value, i feel they should consider all companies which are registered by SEBI.
One needs to put effort to learn to analyze and then there is an element of luck as well. Very practical approach. Selfless expressions. Intellectual steps explained for the learning of an amature in the field. I appreciate the smart attitude for a very smart article. Very good article sir, I just wana know that can i avoid my ltcg tax for the profit earned from stocks by reinvesting back to stocks.
I have been reading a lot of articles to gain knowledge about Stock Market but yours was Very clear with all the terms. Thank you for educating me. Very well summarized… i read a few books and your blog looks like summary of these books. This will give a heads up to all kind of investors.
Is there any solution for It. Not really, unless the company is offering to buyback or if somebody is ready to purchase in off market transaction. Greeting of the day and really very essential and basic conceptual information you have provided to the beginner which give confidence to start swimming in the trade market.
Kudos to author. Even beginners can be understand easily. Thanks for educating us about stock market. I think this informative article would help me to start trading as I am a beginner and was hoping to see an article like this.. I wanted to ask if opening an account with the above mentioned websites , will give me a DEMAT account or will there be a trading account also included , according to my understanding a demat account only stores the stock and to buy and sell i would need a trading account.
Correct me If I am wrong , I just started learning how to invest. Truly, what a simple explanation! I have no words for your article. It was detailed and easy to understand. I believe it covered all topics. Thank you so much. And I wish you a successful and a happy life. Your email address will not be published. Skip to primary navigation Skip to main content Skip to primary sidebar Skip to footer. You must have generated low returns or may have lost money in stocks. In my initial days of investing, I did not make any profits because I was investing in stocks after listening to the stock tips from brokerage houses and so-called experts on TV channels.
But, what if I tell you that there is an easy and simple way to identify some great stocks! You make profits from the stock market with your own analysis….. Learning is more important than earning in the initial days. You can follow my approach even with minimum or no knowledge of financial statements at all. Trading Value Investing You are wrong if you think trading and value investing are one and the same thing. The market is full of such examples of men who lost money indulging in trading.
I focused on my strengths, that is researching stocks and holding for a long period. Let me introduce the art of value investing. Step 1. You can then check the other financial ratios as part of the screening criteria by clicking on the company factsheet To know more in detail about the parameters I have used in screening criteria to filter out stocks you can refer this article on financial ratios.
Step 2. Select only the companies that you understand Now that based on Step 1 you have filtered out stocks with good fundamentals from rest of the garbage, learn more about these stocks by reading about the underlying company as much as you can. Do I understand how the business works and makes money? The business model of the company should be simple and the company should excite you.
You would also like to read — Best investment options in India Step 3. It is equally important to analyze the company from a qualitative aspect — Moat. Note: The current prices may go up and down based on the short-term pain in the markets So, look out and identify such companies with strong moats in the initial days. Find Low Debt Levels Large debt levels pose a significant risk to the company.
This poses a risk of sustainability and may lead to the bankruptcy of the company. Step 5. These two financial ratios put together with help in understanding How profitable a company is in terms of investments How efficiently it is utilizing its resources A company with high RoE and RoCE signals the great potential for future growth in value of the company. Step 6. Honest, Transparent, and Competent Management Fraud management is one of the reasons some people do not trust the stock market with their savings.
So over a period of time, the great game really is in navigating through these twists and turns with knowledge, with discipline, with wisdom and with a due understanding of principles to ensure that navigating is in correct direction, smooth, free from accidents and fruitful. Fundamentally, investing is simple, but not easy. Simple, because it is not difficult to understand the essential principles of investing. Essentially what creates value are really simple ideas.
It is about identifying a large opportunity which is rich in possibilities yet possesses existing, strong fecundity that has earnings growth marshalled with a high degree of character, or, the value accretive growth rather than value destructive growth, that has growth with longevity, predictability and relative smoothness, ensuring that the character of management lets the value of a business be nurtured, protected and shared equitably and applying suitable simple mathematical equation to discount all that future into the present.
Refer our article on how to select a stock for investment which specifically talks about these. This is what is at the innards of fundamentals of value investing. So investing as a concept is essentially simple in its core connotations, but it is not easy because apart from intellect, investing calls for wisdom, apart from knowledge it calls for discipline, and merely high IQ is no guarantee for great investment results, because doing it right, not only knowing it right, is as important.
Even some of the best investors falter at doing it right rather than in knowing it right. More failures have occurred, even among the great investors, on account of the former rather than the latter. The difficult part is getting the right psychological traits, a disciplined behavioural make-up, a quiet sense of innate confidence but not arrogance and rigidity , a sense of serenity in face of adverse market situation and an independent, curious mind.
In that sense, good value investing is a heady mix of a lovely, beauteous art and a very precise looking science. But it is not just one of the two. Science illuminates while the art is pregnant with possibilities and imbued with vivid imagination. So, reality lies between the two. The art part is about understanding the quality and character of the business, of the people behind the business, appreciating what makes the business work and what makes it fail, what makes it robust and what makes it brittle.
Understanding these traits is the art part. The art part also covers the wisdom, discipline, patience and independent mind aspects of value investing. Transcribing the art part into a tangible part and putting that tangible part into a working model including a mathematical one, is what the science part is. So, in some sense, where the art part ends, it feeds into the science part of the investing and then the science part seemingly conjures up the accurate answer.
Depending upon their view point, many tend to see investing as completely capricious, arbitrary, a volatile game akin to gambling and almost unpredictable. And at the other extreme, there are some who reduce investing exercise to purely a mathematical model or a heuristic extension of crowd behaviour, completely divorced from the underlying fundamental ideas such as the quality of the business, the quality of management, size of opportunity, growth and valuation.
But the reality is that the truth lies between the two. It is a judicious and beautiful confluence of the best ideas of art and the best that science can give. The resultant melting pot retains the beauty, on one hand, and elegant simplicity and mathematical rigour, on the other: investing is about that.
It is about combining these variegated ideas and trying to gaze into the future. When you try to do so, it never really is or can be precise. You are leaping into the dark. It is a leap of faith which takes you there. The past does guide you because the past has helped you in understanding probable contours and shapes of conditions that you are likely to find in the future, but not always so. In final analysis staring into the future and getting there is akin to a leap of faith.
No amount of advance preparation completely equips you to handle that probable future and value investing is really about this. It is about collating, assimilating and using all the insights about a business available at a point of time, analyzing it from diverse perspectives some more akin to art while others closer to science, translating it all into a workable model a melodious symphony rather than a cacophony of jutting out blocks of data points and information and finally, forecasting of that future.
When that process is done with integrity, intensity and intellect in that order , the outcome is normally good. In good value investing, these 3is combined together produce a vivid image of beautiful future, and a more replicable future on a sustained basis. And the path to outstanding value creation. These three are your greatest treasures.
Returns are tangible but the risk is not. Hence, the returns appear as real to the investors but risk appears as amorphous. The returns can be real, if and only if, they are earned by undertaking judicious and intelligent risk. Market and investors often behave as if the risk is unreal or an irrelevant trivia.
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