Thursday, August 28, 2014

Top 10 "Deep Rooted" stocks for any portfolio :

Close to 6000 stocks are registered on the stock exchange. Among them, almost 1000 stocks are actively traded in BSE and NSE. When an investor want to start a equity portfolio / build on existing portfolio, they find it difficult to pick the stocks. And when they have adequate funds they buy left - right - and centre ending up with a highly compromised portfolio.

Below mentioned are 10 stocks which are leaders in their respective industry. Apart from being a Large Cap stock, each one of them has got ambitious growth plan. Though the stocks could be trading at higher prices, they could move even higher - the reason being promising future for their business. Rather than buying all sorts of stocks, it makes sense for investors to start with these stocks and then explore unchartered territory.

The main advantage of investing in large cap stocks are:
  • All these stocks have started small, grown in size and become big.
  • Many of these stocks are atleast 50 years old.
  • Being industry leaders they command the market by price and volume.
  • Usually lots of shares are traded in these stocks. Hence it becomes easier to buy and sell these stocks. We call them as highly liquid stocks.
  • All along their growth, these stocks have richly rewarded their investors by way of dividends, rights, bonuses etc. In other words there is some element of clarity / track record on the risk-reward ratio.
  • Most of these companies started new businesses and continue to hold them as subsidary companies. And there is a possiblity of listing these companies - resulting in genuine value unlocking.
  • Above all, in a bull market investors mistake the gain in stock price with the quality of the stock. They need to be cautious here. Small cap companies might have risen 80% buy can fall 80% too. And once they fall, it is often difficult to make a comeback. Large cap companies are don't fall harsh - but have the ability to bounce back once situations revives.
 And there are few more reasons to invest in large cap stocks at this point of time:
  • With change in government there has been change in attitude in dealing with economic problems. Revival in the economy is bound to benefit lots of stocks. Since these large cap stocks are often diversified in business (etc: ITC), they stand to gain the most. 
  • Price Waterhouse Coopers (PWC), an international audit firm, has in its recent report indicated that India is set to become 3rd largest economy by CY 2030 with its young population. Currently we are in 10th position. 
  • Currently very few indian companies feature among top 200 global companies by market value. APPLE is the most valuable company - valued at US$469 billion as on 31st March 2014. IT is followed by Exxon Mobil Corp @ US$ 416 billion and Google @ US$ 409 billion. India's largest company - TCS is valued at US$ 82 billion followed by ONGC  US$ 57 billion and RIL @ US% 53 billion. No Indian company features among Top 100 global companies. China has 8 companies in Top100. And the contrasting feature is India is 3rd largest economy in the world by purchasing power parity. With such a huge muscle power - big indian companies are bound to break through the Top 100 first and then climb up to Top 50 and so on. 
  • Having understood the huge potential, many of these big indian companies have lined up ambitious invesmtment plans. TATA is planning to invest US$ 35 billion (Rs.210000 Cr) in next 3 years ! That is one fourth of India;s tax revenue for FY 2014 and almost equivalent to India's total defense budget of Rs.229000 Cr. These Large companies are investing on expansion just like midcap or smallcap companies. 
Below mentioned are Top 10 "Deep Rooted" Stocks. They could be part of core portfolio of every investor. Click these stocks to read more.

1 comment:

  1. Many thanks for the exciting blog posting! I really enjoyed reading it, you are a brilliant writer. I actually added your blog to my favorites and will look forward for more updates.

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