Stocks for the long and short term portfolio


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Will discuss various companies' worthiness of being in ones portfolio. Some are long term picks, with strong back bone. While others are stocks with good income and hence make good picks for the Uptrend.

Stocks are a proper place to park ones money. I have been trading FnO and realize that it is a source of income. A section of that income has to be saved. FDs, Gold etc are options but not as good. I do not wish to trade with this money, except a few trades a year.
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First we need growth stocks to be traded a few times a year. The basic idea will be to buy them at strong supports. They are expected to show good income so when the trend is up, they will be in good demand. Mid Cap stocks too can be considered, but solid ones at strong supports.... definitely not when scaling all 52W highs..

1) TechM

*Reputed house, Mahindra.
*Consistent income for the past 8 years. This income is growing at a good pace.
*Little or no debt left.

*Is scaling 52 week highs. Best time to get stuck.
*Poor dividends. This is more imp if the stock is buy and hold for years, like Tata Steel.

Conclusion: A great purchase betw 500 and 800


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Tata Chemicals

Has all the features of a company worth keeping.

1) Consistent year on year profit.
2) Market Leadership
3) Tata House
4) Great Div Payout : 30% !!
5) Near its BV @ CMP
6) Is making aggressive expansion, since it has a debt of 6000 Cr. Every Tata Co does.


1) Slightly high on PE. Will wait for a pullback.
2) Debt/Equity is almost 1. That is kinda high.


Buy Levels 290, 270, 240, 190;

In the last 10 years, this co. has shown pullbacks of less than 50% from the top. Except in 2008, tks to Lehman Bros. If history repeats itself, we wont see anything deeper than 240; So 290 would be aggressive, 240 just right.


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1) Consistent Income for past 7 years.
2) Nice Div payout. 40% avg for past 7 yrs. Co gives away its profit to shareholders. Nice principle. This comes to a yield of 4.5%. Not bad. Beats any savings A/c.
3) Low PE in its sector.

1) Nothing major. Growth is slow.

Conclusion: This comes across as a company with focus. A great buy at lower levels.

45 is an ideal entry. Buy and Hold pretty much forever.
75 is safe, but tad bit high.

So 75-45 is the buy region.


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Accumulating TS will prove very fruitful. The company will see a phenomenal up-turn, but in due time. Reason:

The debt put-on due to acquisition of Corus has weighed down heavily on its rating. It is paying huge amount of interest, around 4000 CR PLUS. To add to the woes, this industry is doing poorly. TS has loss of 100 cr this year.

Due to these factors the price is not expected to break above its 200 sma. On the contrary, the acquirer can expect to get fills at deep supports. 340 is already reached and turn around of the Co is still distant. So the next belt to SIP in is 120 to 260;

On the brighter side, when the turn around comes profit is going to be around 10K per year. A few such years will wipe the debt.

In the entire history, Tata Steel has always made newer all time highs. If the acquirer is only conservative and considers the current all time high of 800 as his exit point and makes an avg purchase of 250 then it is a growth of 350%; If that happens even in 10 years, then 35% growth p.a. is good to die for; and 3.5% annual return in form of Dividends.

Conclusion: The company is an absolute gem, but at lower levels.


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BHEL is ready for immediate purchase, any buyers?

Excellent company.

PROS (like no other)

*Consistent profits and super operating Margin of 20% which shows its grip in the industry.
*no debt (unlike tatas)
*awesome price... 2008 LOWS !! What more do you want for your hard earned money!
*PE of only 7; below market average. The only reason is that this sector is not performing for several quarters now. But, when it does LT, BHel, siemens will rock
*Aur upar sae 3% dividend; Company believes in giving away profit. Div Payout is over 20%;

*Very bad sector. Money intensive and depends on national growth. So dependent on GOI.
*Big pockets (FII, MFs) tend to buy stocks that show growth. Being consistent with profits is not good enough, they want growth else the stock is likely to correct deeply.

Conclusion: While waiting for tata steel to come to right price... start accumulation in Bhel... all time high is 600. Room for growth is 300%+dividends. Better opportunity than any FD.
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Nice thread, hope you will also talk about portfolio allocation as one satyam can easily rock the boat.

Yes, of course!

Diversification in investment is just as important as SL in trading.

Will first set a limit for a sector and then for companies in it.

For ex. in metals we have Tata Steel, Sail and Hindalco; So if metals has Rs.100 allocated then that is the limit. The 3 will have to fight for their share.



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As an investor our primary perspective is to buy good companies at cheap valuations so that there is plenty of upward scope and room.

We won't be aiming to better the Index or FD every year, but most definitely over a period (with proper allocation and diversification).

The logic is simple, if a company has and maintains nice stats then it is bound to take off when the prospects of the industry improves. Our job, then is to find such companies and the right price to buy them.

Having only 10 such companies is enough.


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Every sector goes through a bad phase of a few months or even years. This is the time to get in for the long haul. But, to do that you have to be sure that the company has the spine to survive the bad phase. Hence, selection of company and purchase band both have to be conservative.

Now, metal, power and power related and engn sectors are doing poorly. These companies are likely to give solid bargains.

Wish I had bought Tata Motors and maruti while I had the chance !!!

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