Get Magazines for free

Categories

10000 to 4crs in 18 months 1000rs to 50crs 300% returns 75% promoter holdings A 50 bagger A sureshot 5 bagger Analysis Another fraud? Auto ancillaries Bank sector Blind sell Brand plays Broking Bse Nse Buy calls cements Ceramics/tiles Counters I don't like Debt free businesses Delisting candidates demerger bets Disclosure- I own them Domestic consumption plays E-Commerce pick Education Exit at rallies Famous analysts Famous stocks FMCG Footwear future multibaggers Gems andJewellery Hidden gems High conviction ideas High dividend plays High potential small caps High ROE stocks Holding companies Hotel sector How they looted you.. Indian stock market Infrastructure sector Interesting Microcaps IT KPO Landbank plays largecap ideas Less than 5 PE stocks Liquor Logistics Market lessons Market outlook for 2013 and 2014 Market underperformers Meeting with the CEO Metals Monopoly businesses My 5 baggers My Favourite counters My paid stock recommendations My stock picking techniques nse bse tips Oil exploration Operator calls Paints Penny stock outlook penny stock updates Pharma sector Poultry stocks PSU Publicity freaks Real estate Renewable energy plays Safe bets Sell recommendations Share market Live shipping stocks short term call SOTP plays stock tips stock under 10rs Stocks to watch out for Strong bonus candidates Takeover candidates TATA product tea Textiles The 13 bagger The 45 bagger Trading companies Transformers Turnaround bets Tyres Uncertain/Risky business models Unique businesses

Search This Blog(Over 800 companies covered in the blog).

Please note

Note: The artciles are not research reports but assimilation of information available on public domain and it should not be treated as a research report.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that I might have the dkiscussed companies in my portfolio and hence my point of view can be biased.Readers should consult registered consultants before making any investments
.

Archives : Old artciles

Wednesday, February 16, 2011

How you can spot the multibaggers

I am a 22yrs old at present and my experience in investing for the past 7-8 years is that,most of the time,the market discounts the performance of companies.The potential largely remains unappreciated.The phenomenon is more visible in mid and small cap companies.My experience of investing in bharti telecom is one of the glaring examples of valuation of the company not reflecting the true potential of the business.The company at that time was very aggressively building up the network in the country.Globally,mobile telephony has been established as a big business,wheras in India,its potential was completely untapped.

The market was so pessimistic that by January 03 the stock fell to as low as rs 20 and its book value was 25rs.Hence the price to book value was 0.8x for a company which was building up India”s largest cellular network.At that level,the company was not even valued at its break-up value,forget about the future potential and prosperity,which was offcourse not visible in the quarterly results.But to a global investor of some repute,this anomaly was crystal clear.It is also not a case of market being in dire straits.The sensex was around 6000 I guess.

It is believed that speculators buys stock to profit from change in stock prices,while investors buys stock for income from the assets.The speculators typically pre-empt the investors.Hence,eventually,it all boils down to someone”s estimate of the future income of the company.In investing it is only after 5-10 years that one will know who was right that period ago.So todays opinion about the future period earnings and tomorrow”s price will reflect tomorrow”s opinion about the next 5-10 years of earnings.

When companies are making losses,be it an existing company or a newcompany,investors shy away from the stock and wrongly extrapolate the current condition well into the future.So much so,that asset prices go significantly below the replacements costs.Problem is that you guys understand price and you hardly bother about the ‘value” in the market.

I would like to cite another example of an existing company called Birla corporation being long neglected by the markets.In 2003-04 when ultratech was acquired by grasim at an enterprise value of $85 per tonne this birla corp with the birla brand was available at an EV of $10 per tonne.The company had incurred losses for 6 consecutive years and the book value was about 30rs per share and the stock was quoting 65% discount to its BV at 19-20 then.The break-up value too was just about 20% for the company.The only problem was no visibility in earnings thanks to the over capacity in the cement industry for a long period.But the potential was rightly valued at about $85 per tonne.In the past few years look where birla corp has moved,thus making it a 15 bagger.

So you see even if a company is not making profits it can well be the next success story.But thing is that you would need to have patience in clinging on to them.They can very well disappoint you bigtime with their underperfomance in a good period but over the long run they would make you a hell lot wealthier.I would soon pen down several loss making companies with immense potential which can repeat the success of these mentioned duo-Hope they would be given a rapt attention and eventually wealth gonna swell.


Regards,
ARUN
9804589299
I can be reached at:-arunanalyst@rediffmail.com

1 comment:

Chetan Isharani said...

Good observation. And, also filter for management quality. Doubtful practices result in companies selling below book value. But rightly so.

Important Disclaimer&Privacy policy

This blog does not share personal information with third parties nor do we store any information about your visit to this blog other than to analyze and optimize your content and reading experience through the use of cookies.You can turn off the use of cookies at anytime by changing your specific browser settings.This privacy policy is subject to change without notice and was last updated on 20.3.2013. If you have any questions, feel free to contact me directly here: arunsharemarket@gmail.com Investment in equity shares has its own risks.Sincere efforts have been made to present the right investment perspective.The information contained herein is based on analysis and up on sources that I consider reliable. I,however,do not vouch for the accuracy or the completeness thereof.This material is for personal information and am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.The stock price projections shown are not necessarily indicative of future price performance.The information herein, together with all estimates and forecasts, can change without notice.
 
x

Subscription to Arunthestocksguru

Enter your email address:

Delivered by FeedBurner