Orient paper
Inventure Growth
ABG Infralogist
Zicom
Acropetal Tech
Cosmo Films
PSL
Zylog Systems
Rajkumar Forge
Sakthi Paper
Micro Tech
Most of the stocks are relatively unknown and low priced, low market capitalization stocks. I know a little about Cosmo films, Zicom and Micro Tech the other eight stocks I know virtually nothing about. I have selected the stocks from a list of High Dividend yield stocks I found at:
http://www.moneycontrol.com/stocks/marketstats/bsetopdiv/
I have repeated the link at the end of the blog for your reference. The only stock I have picked from outside this list is Zicom, because I like the industry that the company is in. I will discuss each stock in detail and in each case conclude whether I will invest in it or not. I am doing the exercise because I am actually going to invest in any or all companies, which are investable. However, before I go on to discuss the stocks I want to write about how easy it is to pick winning stocks and what method I follow. I must caution you however, that equity investment is very high risk.
Investing in the stock markets.
I stopped investing in the stock market about 10 years ago. I have been thinking for the past few years to start investing once again. I say investing and not trading; because I believe that the two are quite different. As an investor in the market (any market). You would spend some time researching whatever it is that you plan to invest in. You understand the pros and cons of your investment and most importantly you are going to stick with the investment for the long term. Investing is what I believe in, and have made substantial gains between 1992 and 2003. Trading is a different ball game all-together. First of all I do not understand what a traders’ mindset is. Secondly, I do not believe you can sit behind a terminal every day and make money by buying in the morning and selling in the evening. This certainly is a recipe for disaster. As a trader you take very high risk, spend too much time and on an average make less or no money, over say a period of one or 2 years, as compared to an investor. I very strongly believe that stock trading is more risky than gambling in a casino.
Fundamental analysis:
When I invest I look at the following parameters of any company I am going to invest in. The items are: Book Value, Earning per Share (EPS), Dividend (at least for the past five years), face-value, Price to earnings ratio, Dividend yield (not very important in case of good companies) and price to book value ratio.
In case of good companies with excellent management and blue chip companies, it may not be really worthwhile looking at dividend yield and price to book value ratio. However, this time around I decided to try and pick some cheap, multi-bagger stocks. If you invest in good and very good companies your risk is much lower but the upside is relatively limited. A Tata Motors, ICICI Bank or Hindustan Uniliver, may give you a return of 20% in 12 months, but a smaller lesser known company on a growth path could double or triple in the same period. However, if you decide to invest in lesser known companies with new managements, be prepared to lose everything you put in. If you are looking for a safe investment I suggest the safest is a bank term deposit, but it does not even cover inflation. Your second choice could be gold. If you have a large sum of money, invest in real estate. Last of all relatively safe would be blue chip companies like, Mahindra and Mahindra, Tata Motors, Lupin, Reliance Industries Ltd, Infosys Technologies Ltd, Bharti Airtel Ltd, Larsen & Toubro Ltd. Investing in such companies you could still lose money but even in the worst markets you will be left with a substantial something, never for a moment forget that equity investment is and will always be high risk, no matter how good a company you invest in.
To see a list of top 50 companies listed on the National Stock Exchange (NSE) follow this link: http://www.moneyworks4me.com/best-index/nse-stocks/nifty-50-companies
I have put this link at the end of this post so you can visit it later.
It takes some effort and time to research the stocks you are going to buy. However, timing the markets according to me is impossible. So once you find the stocks you want to put your money in, just start buying. The best option you have, is to spread your investment over a period of time, instead of buying everything in one go. The second option could be to buy at a time when the future of the market looks dark, and everyone is negative about the market. Sell, which is the most difficult decision to act upon, when the markets are on a roll and there seems to be no end in sight. Markets follow a definite pattern of reaching unreal highs and unreal lows, which are difficult to explain when it is happening. Most market experts will give you a very accurate explanation post facto, but when it is happening there never is any explanation.
Why is selling the most difficult?
You will need a lot of discipline and will power to be able to execute a sell. You need to predefine a sell price and a stop loss before you buy a stock. Once you do that when a stock closes below your stop loss for say 2 or 3 successive trading sessions you must cut your loss by executing a sale, even if you decide later to re-purchase the stock. On the other hand the moment you find a stock has crossed your predefined level on the upside you must execute a sell, even if you re-purchase it later, after proper deliberation. Most people lose money because they cannot sell because of the loss or because fear of a notional loss. By notional loss I mean, you would have made a bigger profit if you had not sold when it is that you sold the stock.
Hold, sell or buy.
I personally do not believe in what is known as a “hold” recommendation. For me a stock is either a buy(able) stock or a sell(able) stock at any given point in time. If it is buyable I will ideally buy more of it and “hold” what I already have. If a stock is sellable it should be sold irrespective of whether you are making a loss or profit. Never hold a stock to make more profit or to recoup any loss you are sitting on. Also never get emotionally attached to any stock. Always remember, you bought it in the first place to make a profit, so if you are making a good profit, book it. You are in the market because of your “greed” for lack of a better word. Greed is good that is what makes the markets work, but too much of it is not good. So make a reasonable profit, never look at what you have lost because you sold too early. Always look at what you made, and find new opportunities to re-deploy the money you make. I have already said “timing the market” is virtually impossible. However, there is an exceptional situation. When your barber or the taxi driver or just about everyone around is recommending stocks, it is time, my friend, to exit the markets; lock, stock, and barrel. On the other hand when everyone is telling you to stay away it is time to buy. In both cases, it may seem like a wrong decision in the short run, but it will pay off if you are confident of your decision and stick with it. If you are weak hearted, put your money in the bank and earn interest, do not even think about the stock market.
Investment in equity Vs. Mutual Funds
I can tell you my view in one simple line. Investing in stocks thru a mutual fund is giving your money to an expert to lose it for you. Mutual funds are exposed to the same risks as any individual stock is. If you want to invest, do your own research and make your own profit or loss. Most mutual fund managers do not beat the market, and they charge a fee, for what I consider not a very good job. I have seen some small Individual investors manage their portfolios better. Also, when you invest thru a mutual fund you are eventually investing in individual stocks. Choosing a mutual fund, today is as difficult as choosing a good stock because there are hundreds of them around. So my recommendation to anyone interested in the stock market is, invest directly and invest in sectors you know something about. Picking good companies to invest in is not really rocket science.
Stock markets can be very profitable for some and a disaster for others. Many people make money in the stock market and an equal or larger number lose all they’ve got. The question is who makes money in these markets? What you need is a lot of discipline, some analytical skill and ability to look at a loss and know when to book it. But first of all picking the right stock is most important.
Information about stocks is all around us. The value of a stock depends on the potential of a company to make money. Let us say company X is in the business of making detergents and most of its revenue comes from this one product. You are someone who is using detergent manufactured by company Y. One day you realize that a lot of people you know are talking about the product of company X. So you give it a try and find that the detergent is cheaper, cleans better and in every way beats the detergent of company Y. Now this should be a good signal for you to look at the stock of the company, and evaluate it for investment. Let us assume that in your research you find; the company (X) has been around for 10 years; it has been paying dividend for the past 5 years; it’s earning per share (EPS) is good; it’s price/earnings multiple is under 10 and its book value is at the least above par. The price has been stable or rising for the last 3 to 12 months. The company’s sales and profits are on the rise. When I invest these are usually the parameters I evaluate. For an unknown and small company I look at the price to book value also. In case you do not understand any of these terms, please stop learn more about stock research and then start investing. Don’t start putting your money based on “tips” brokers are sending you by text message or recommendations you read in the newspapers or learn from your friends or whatever. If you intend to make money in this market, you need to know the basics. Now let us look at a few specific examples and why I am going to invest in them or have decided to hold back.
Zicom
Zicom is an electronic security products manufacturer. It manufactures stuff like CCTV Surveillance systems, Video door phones, Recorders, Jammers, mobile signal boosters and more… I picked this company 3 years ago. But never got to buying it till now because my trading account was closed and I never got down to reviving it. But I am re-evaluating the company because now if it still holds promise I will be able to invest in it.
Now let’s get back to the company: I like the industry, it has a healthy growth rate. Spending in this sector will continue even if the economy is in a bad state. Government is spending a lot in this sector. In short it is a great Industry to invest in.
I came across Zicom at a price of around Rs 35. It had paid a dividend of Rs 5 per share. So the dividend yield for that year was 14.29%. I never looked at other factors then, because I was not being able to buy. However, now the price is 2.5 times higher at Rs. 86 and the dividend payout in the past 2 years has been 10%. But the industry is still excellent. I cannot buy the stock for dividend; the yield is only 1.16%. Book value is excellent at Rs 100, and EPS is fair at Rs 4.1 per share. But the stock looks fully priced at P/E at 21. I usually do not invest in a stock with a P/E over 14. But it depends on a number of other factors. I have put it on my watch list. The AGM of the company is on the 17th of May that is when we will get the latest EPS figure and Dividend payout number, with other data. If the EPS and/or dividend go up it becomes buyable. But I am not buying right away.
All the stocks discussed below have been taken from the list of high yield stocks as the starting point of this analysis the list is available at:
http://www.moneycontrol.com/stocks/marketstats/bsetopdiv/
Zylog Systems
The stock is priced at Rs 54.85 On 17-05-2013, up from 49.5 a few days ago when I first shortlisted the stock. That is appreciation of 10.8% in less than 15 days. The stock has paid dividend consistently for the past 5 years between 30% and 100%. So, its dividend yield is 9.12%. The book value of the stock is at a brilliant Rs 256; therefore, price to book value ratio is fantastic 0.214 times. The EPS is good at Rs 45, so the price to earnings ratio is at 1.2 times. The results were last declared on September 25, 2012, so it could take some time for this year’s numbers to come out. The stock is a definite buy for me. In a company like this with such numbers, it really does not matter whether I buy at Rs40 or Rs 60. It looks like a good long term bet. It is best to buy slowly over a stretched period of time, even if it means paying a little more. I never try to time the market, because I believe it is a waste of time, and humanly impossible.
Acropetal Tech:
The price of the stock is Rs 6.45. I usually avoid such low priced stocks because only one out of a hundred will perform in the long run. However in the short term you can sometimes get excellent returns from such stocks. But it is still important to look at all the fundamentals. The company has paid dividend for at least 5 years 7% and 12%, in September 2012 it paid 12%. So the dividend yield is 18.6%. Last year’s EPS is Rs 3.30, so the P/E multiple is 1.9. In other words the price of the stock is less than 2 times its net profit. It is however not in a very exciting business and there is too much competition. It does some very low end technology services business, taking advantage of labour arbitrage. In short I do not like the business. However, the book value is Rs72, thus the price to book value ratio is 0.09%. In other words the price of the stock is 9% its book value. The stock closed below its 30 day support level of Rs 6.64, so there may be more downside. The stock price will get good support at around Rs5.9; if it falls below that there will be more downside. There will also be resistance at around Rs 7; however, if it breaks out above that there may be a good upside. The two numbers Rs5.9 and Rs7 are technical analysis numbers, which is beyond the scope of this post. I will talk about technical analysis in another post. The stock is not a very exciting proposition, but it is not worth leaving altogether. So I have decided to buy a small chunk. But I am prepared to lose it all, because the money may double or triple in a very short time. So this stock is not really an investment but like buying a lottery ticket, or just a little better. I would say either I will triple my investment in 6 to 12 months or will lose everything.
Orient paper:
The price of the stock is Rs 8.05. It has consistently given dividend at least for the last 5 years, which rose from 120% in 2008 to 200% in 2012. So the dividend yield on the latest dividend is 24.84%. The dividend yield on the dividend paid by the company in 2008 is also good at 14.91%. The book value is at Rs21, so the price to book value ratio is 2.6 times, which is fair. The EPS is Rs 1.6 per share thus the price to earnings ratio is 5.1 times. The stock has good technical support below Rs7, so the downside, if any is not much. Based on this information the stock looks like a good pick. However, the company made a loss of Rs 87.77 crore (or 877.7 million). This is a cause for concern, so it will be good to see what the company does in the next couple of quarters and the dividend it pays this year. So I will not invest in it for now. In the same industry Shakti Paper may be a better bet.
Sakthi Paper:
The price of the stock as on 16-05-2013 is Rs 21.25. It has paid dividend between 15% and 21%, in the last five years. So the dividend yield is 9.9%. Book value is at Rs22. Thus, it is quoting at about the same price as its book value. The EPS is Rs 3.8, so the Price to earnings (P/E) ratio is 5.5 times. The last AGM was on May 24, 2012, so we may get the latest results and dividend data around that time in a few days. The stock looks investable, but I will look at the latest data before investing. If the market mood becomes upbeat I may start buying anyway. There does not seem to be much downside to the stock and looks like better investment than Orient Paper in the same industry.
PSL Ltd
Everything looked fine till December 2012. But the company has made a loss in the fourth quarter of the previous financial ending March 31, 2013. So I am not getting into analysing the stock, and have decided not to invest. The price of the share is Rs 31.25 and book value has dropped from Rs171 to Rs142.
Cosmo Films
I am not really excited about the Industry, Packaging material and BOPP films. However, I have owned the stock before and am sure the company is strong, with a good management. The stock is quoting at Rs 68 and has an EPS of Rs 11.5, so the price is about 6 times its profits. It has consistently paid a dividend of 50% for the past five years. The dividend yield is at 7.35%, so you cannot really buy it for dividend, bit other numbers look good. The book Value is at Rs 184, thus the price is a little over one third the real value of the business. The board of directors will meet on May 27, 2013 and I will wait for the latest numbers including dividend to be declared before investing.
Rajkumar Forge
I put the stock on my shortlist at Rs 14.85. The stock has appreciated 13%, and was priced at Rs 16.80 at market close on May 17, 2013. The company has been paying a dividend between 8.5% and 15% in the past 4 years. It did not pay any dividend in 2008. So the dividend now stands at 8.9%. I have conflicting figures of EPS and Book value, from different sources. The EPS figures I have are Rs 4.7 and Rs 5.75, and the book value figures I have are Rs 18 per share and Rs 23.21 per share. For this analysis I am taking the lower figures. Based on the lower figures the Price to Earnings ratio is 3.6 and the price to book value ratio is 0.93 times. Last AGM the company had was in 2011. The stock does not look very exciting. However I would wait for the latest data before I put my money in this company.
Micro Tech
The stock is priced at Rs 8.20 as on May 17, 2013. The company has paid dividend between 10% and 20% between 2008 and 2012. So Dividend yield to last year’s dividend (10%) is at 12.2%. The book value is at a healthy Rs 200, but the latest EPS figure is a disappointing Rs0.44 per share. I lost some data but I think the company made a loss of around 43 crore in the quarter ended March, 2013. So, for now the stock is not a buy for me.
ABG Infralogist
The stock is quoting at Rs 47.90. The book value of the stock is at Rs 198 per share. The company has paid dividend between 40% and 100% in the last 5 years. So the dividend yield on last year’s dividend of 50% is 10.44% which is good. However the company made a loss and the EPS figure available is Rs -14 per share. Considering the book value and the dividend history I would take a small gamble in the company. However, a serious investment should be considered only when the latest Dividend and results are available. The last AGM was held in June, so hopefully we will have the latest numbers in hand in about a month.
Inventure Growth
The stock is priced at Rs 5.60. The company has paid dividend 10% dividend in the past 4 years and once it paid 30%. So dividend yield for 2012 is an impressive 17.86%. But that is where the story ends. The EPS is at a measly Rs0.15 and book value is at Rs 18. So there is seems no reason really to look any further. I will not invest in this company.
I will write about more companies and the prospects of investing in their equity as I start investing and do more research and find more stories. From now on I will only write about companies I decide to invest in.
High Dividend yield stock list
http://www.moneycontrol.com/stocks/marketstats/bsetopdiv/
Top 50 companies listed on the National Stock Exchange (NSE):
http://www.moneyworks4me.com/best-index/nse-stocks/nifty-50-companies
Inventure Growth
ABG Infralogist
Zicom
Acropetal Tech
Cosmo Films
PSL
Zylog Systems
Rajkumar Forge
Sakthi Paper
Micro Tech
Most of the stocks are relatively unknown and low priced, low market capitalization stocks. I know a little about Cosmo films, Zicom and Micro Tech the other eight stocks I know virtually nothing about. I have selected the stocks from a list of High Dividend yield stocks I found at:
http://www.moneycontrol.com/stocks/marketstats/bsetopdiv/
I have repeated the link at the end of the blog for your reference. The only stock I have picked from outside this list is Zicom, because I like the industry that the company is in. I will discuss each stock in detail and in each case conclude whether I will invest in it or not. I am doing the exercise because I am actually going to invest in any or all companies, which are investable. However, before I go on to discuss the stocks I want to write about how easy it is to pick winning stocks and what method I follow. I must caution you however, that equity investment is very high risk.
Investing in the stock markets.
I stopped investing in the stock market about 10 years ago. I have been thinking for the past few years to start investing once again. I say investing and not trading; because I believe that the two are quite different. As an investor in the market (any market). You would spend some time researching whatever it is that you plan to invest in. You understand the pros and cons of your investment and most importantly you are going to stick with the investment for the long term. Investing is what I believe in, and have made substantial gains between 1992 and 2003. Trading is a different ball game all-together. First of all I do not understand what a traders’ mindset is. Secondly, I do not believe you can sit behind a terminal every day and make money by buying in the morning and selling in the evening. This certainly is a recipe for disaster. As a trader you take very high risk, spend too much time and on an average make less or no money, over say a period of one or 2 years, as compared to an investor. I very strongly believe that stock trading is more risky than gambling in a casino.
Fundamental analysis:
When I invest I look at the following parameters of any company I am going to invest in. The items are: Book Value, Earning per Share (EPS), Dividend (at least for the past five years), face-value, Price to earnings ratio, Dividend yield (not very important in case of good companies) and price to book value ratio.
In case of good companies with excellent management and blue chip companies, it may not be really worthwhile looking at dividend yield and price to book value ratio. However, this time around I decided to try and pick some cheap, multi-bagger stocks. If you invest in good and very good companies your risk is much lower but the upside is relatively limited. A Tata Motors, ICICI Bank or Hindustan Uniliver, may give you a return of 20% in 12 months, but a smaller lesser known company on a growth path could double or triple in the same period. However, if you decide to invest in lesser known companies with new managements, be prepared to lose everything you put in. If you are looking for a safe investment I suggest the safest is a bank term deposit, but it does not even cover inflation. Your second choice could be gold. If you have a large sum of money, invest in real estate. Last of all relatively safe would be blue chip companies like, Mahindra and Mahindra, Tata Motors, Lupin, Reliance Industries Ltd, Infosys Technologies Ltd, Bharti Airtel Ltd, Larsen & Toubro Ltd. Investing in such companies you could still lose money but even in the worst markets you will be left with a substantial something, never for a moment forget that equity investment is and will always be high risk, no matter how good a company you invest in.
To see a list of top 50 companies listed on the National Stock Exchange (NSE) follow this link: http://www.moneyworks4me.com/best-index/nse-stocks/nifty-50-companies
I have put this link at the end of this post so you can visit it later.
It takes some effort and time to research the stocks you are going to buy. However, timing the markets according to me is impossible. So once you find the stocks you want to put your money in, just start buying. The best option you have, is to spread your investment over a period of time, instead of buying everything in one go. The second option could be to buy at a time when the future of the market looks dark, and everyone is negative about the market. Sell, which is the most difficult decision to act upon, when the markets are on a roll and there seems to be no end in sight. Markets follow a definite pattern of reaching unreal highs and unreal lows, which are difficult to explain when it is happening. Most market experts will give you a very accurate explanation post facto, but when it is happening there never is any explanation.
Why is selling the most difficult?
You will need a lot of discipline and will power to be able to execute a sell. You need to predefine a sell price and a stop loss before you buy a stock. Once you do that when a stock closes below your stop loss for say 2 or 3 successive trading sessions you must cut your loss by executing a sale, even if you decide later to re-purchase the stock. On the other hand the moment you find a stock has crossed your predefined level on the upside you must execute a sell, even if you re-purchase it later, after proper deliberation. Most people lose money because they cannot sell because of the loss or because fear of a notional loss. By notional loss I mean, you would have made a bigger profit if you had not sold when it is that you sold the stock.
Hold, sell or buy.
I personally do not believe in what is known as a “hold” recommendation. For me a stock is either a buy(able) stock or a sell(able) stock at any given point in time. If it is buyable I will ideally buy more of it and “hold” what I already have. If a stock is sellable it should be sold irrespective of whether you are making a loss or profit. Never hold a stock to make more profit or to recoup any loss you are sitting on. Also never get emotionally attached to any stock. Always remember, you bought it in the first place to make a profit, so if you are making a good profit, book it. You are in the market because of your “greed” for lack of a better word. Greed is good that is what makes the markets work, but too much of it is not good. So make a reasonable profit, never look at what you have lost because you sold too early. Always look at what you made, and find new opportunities to re-deploy the money you make. I have already said “timing the market” is virtually impossible. However, there is an exceptional situation. When your barber or the taxi driver or just about everyone around is recommending stocks, it is time, my friend, to exit the markets; lock, stock, and barrel. On the other hand when everyone is telling you to stay away it is time to buy. In both cases, it may seem like a wrong decision in the short run, but it will pay off if you are confident of your decision and stick with it. If you are weak hearted, put your money in the bank and earn interest, do not even think about the stock market.
Investment in equity Vs. Mutual Funds
I can tell you my view in one simple line. Investing in stocks thru a mutual fund is giving your money to an expert to lose it for you. Mutual funds are exposed to the same risks as any individual stock is. If you want to invest, do your own research and make your own profit or loss. Most mutual fund managers do not beat the market, and they charge a fee, for what I consider not a very good job. I have seen some small Individual investors manage their portfolios better. Also, when you invest thru a mutual fund you are eventually investing in individual stocks. Choosing a mutual fund, today is as difficult as choosing a good stock because there are hundreds of them around. So my recommendation to anyone interested in the stock market is, invest directly and invest in sectors you know something about. Picking good companies to invest in is not really rocket science.
Stock markets can be very profitable for some and a disaster for others. Many people make money in the stock market and an equal or larger number lose all they’ve got. The question is who makes money in these markets? What you need is a lot of discipline, some analytical skill and ability to look at a loss and know when to book it. But first of all picking the right stock is most important.
Information about stocks is all around us. The value of a stock depends on the potential of a company to make money. Let us say company X is in the business of making detergents and most of its revenue comes from this one product. You are someone who is using detergent manufactured by company Y. One day you realize that a lot of people you know are talking about the product of company X. So you give it a try and find that the detergent is cheaper, cleans better and in every way beats the detergent of company Y. Now this should be a good signal for you to look at the stock of the company, and evaluate it for investment. Let us assume that in your research you find; the company (X) has been around for 10 years; it has been paying dividend for the past 5 years; it’s earning per share (EPS) is good; it’s price/earnings multiple is under 10 and its book value is at the least above par. The price has been stable or rising for the last 3 to 12 months. The company’s sales and profits are on the rise. When I invest these are usually the parameters I evaluate. For an unknown and small company I look at the price to book value also. In case you do not understand any of these terms, please stop learn more about stock research and then start investing. Don’t start putting your money based on “tips” brokers are sending you by text message or recommendations you read in the newspapers or learn from your friends or whatever. If you intend to make money in this market, you need to know the basics. Now let us look at a few specific examples and why I am going to invest in them or have decided to hold back.
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Zicom is an electronic security products manufacturer. It manufactures stuff like CCTV Surveillance systems, Video door phones, Recorders, Jammers, mobile signal boosters and more… I picked this company 3 years ago. But never got to buying it till now because my trading account was closed and I never got down to reviving it. But I am re-evaluating the company because now if it still holds promise I will be able to invest in it.
Now let’s get back to the company: I like the industry, it has a healthy growth rate. Spending in this sector will continue even if the economy is in a bad state. Government is spending a lot in this sector. In short it is a great Industry to invest in.
I came across Zicom at a price of around Rs 35. It had paid a dividend of Rs 5 per share. So the dividend yield for that year was 14.29%. I never looked at other factors then, because I was not being able to buy. However, now the price is 2.5 times higher at Rs. 86 and the dividend payout in the past 2 years has been 10%. But the industry is still excellent. I cannot buy the stock for dividend; the yield is only 1.16%. Book value is excellent at Rs 100, and EPS is fair at Rs 4.1 per share. But the stock looks fully priced at P/E at 21. I usually do not invest in a stock with a P/E over 14. But it depends on a number of other factors. I have put it on my watch list. The AGM of the company is on the 17th of May that is when we will get the latest EPS figure and Dividend payout number, with other data. If the EPS and/or dividend go up it becomes buyable. But I am not buying right away.
All the stocks discussed below have been taken from the list of high yield stocks as the starting point of this analysis the list is available at:
http://www.moneycontrol.com/stocks/marketstats/bsetopdiv/
Zylog Systems
The stock is priced at Rs 54.85 On 17-05-2013, up from 49.5 a few days ago when I first shortlisted the stock. That is appreciation of 10.8% in less than 15 days. The stock has paid dividend consistently for the past 5 years between 30% and 100%. So, its dividend yield is 9.12%. The book value of the stock is at a brilliant Rs 256; therefore, price to book value ratio is fantastic 0.214 times. The EPS is good at Rs 45, so the price to earnings ratio is at 1.2 times. The results were last declared on September 25, 2012, so it could take some time for this year’s numbers to come out. The stock is a definite buy for me. In a company like this with such numbers, it really does not matter whether I buy at Rs40 or Rs 60. It looks like a good long term bet. It is best to buy slowly over a stretched period of time, even if it means paying a little more. I never try to time the market, because I believe it is a waste of time, and humanly impossible.
Acropetal Tech:
The price of the stock is Rs 6.45. I usually avoid such low priced stocks because only one out of a hundred will perform in the long run. However in the short term you can sometimes get excellent returns from such stocks. But it is still important to look at all the fundamentals. The company has paid dividend for at least 5 years 7% and 12%, in September 2012 it paid 12%. So the dividend yield is 18.6%. Last year’s EPS is Rs 3.30, so the P/E multiple is 1.9. In other words the price of the stock is less than 2 times its net profit. It is however not in a very exciting business and there is too much competition. It does some very low end technology services business, taking advantage of labour arbitrage. In short I do not like the business. However, the book value is Rs72, thus the price to book value ratio is 0.09%. In other words the price of the stock is 9% its book value. The stock closed below its 30 day support level of Rs 6.64, so there may be more downside. The stock price will get good support at around Rs5.9; if it falls below that there will be more downside. There will also be resistance at around Rs 7; however, if it breaks out above that there may be a good upside. The two numbers Rs5.9 and Rs7 are technical analysis numbers, which is beyond the scope of this post. I will talk about technical analysis in another post. The stock is not a very exciting proposition, but it is not worth leaving altogether. So I have decided to buy a small chunk. But I am prepared to lose it all, because the money may double or triple in a very short time. So this stock is not really an investment but like buying a lottery ticket, or just a little better. I would say either I will triple my investment in 6 to 12 months or will lose everything.
Orient paper:
The price of the stock is Rs 8.05. It has consistently given dividend at least for the last 5 years, which rose from 120% in 2008 to 200% in 2012. So the dividend yield on the latest dividend is 24.84%. The dividend yield on the dividend paid by the company in 2008 is also good at 14.91%. The book value is at Rs21, so the price to book value ratio is 2.6 times, which is fair. The EPS is Rs 1.6 per share thus the price to earnings ratio is 5.1 times. The stock has good technical support below Rs7, so the downside, if any is not much. Based on this information the stock looks like a good pick. However, the company made a loss of Rs 87.77 crore (or 877.7 million). This is a cause for concern, so it will be good to see what the company does in the next couple of quarters and the dividend it pays this year. So I will not invest in it for now. In the same industry Shakti Paper may be a better bet.
Sakthi Paper:
The price of the stock as on 16-05-2013 is Rs 21.25. It has paid dividend between 15% and 21%, in the last five years. So the dividend yield is 9.9%. Book value is at Rs22. Thus, it is quoting at about the same price as its book value. The EPS is Rs 3.8, so the Price to earnings (P/E) ratio is 5.5 times. The last AGM was on May 24, 2012, so we may get the latest results and dividend data around that time in a few days. The stock looks investable, but I will look at the latest data before investing. If the market mood becomes upbeat I may start buying anyway. There does not seem to be much downside to the stock and looks like better investment than Orient Paper in the same industry.
PSL Ltd
Everything looked fine till December 2012. But the company has made a loss in the fourth quarter of the previous financial ending March 31, 2013. So I am not getting into analysing the stock, and have decided not to invest. The price of the share is Rs 31.25 and book value has dropped from Rs171 to Rs142.
Cosmo Films
I am not really excited about the Industry, Packaging material and BOPP films. However, I have owned the stock before and am sure the company is strong, with a good management. The stock is quoting at Rs 68 and has an EPS of Rs 11.5, so the price is about 6 times its profits. It has consistently paid a dividend of 50% for the past five years. The dividend yield is at 7.35%, so you cannot really buy it for dividend, bit other numbers look good. The book Value is at Rs 184, thus the price is a little over one third the real value of the business. The board of directors will meet on May 27, 2013 and I will wait for the latest numbers including dividend to be declared before investing.
Rajkumar Forge
I put the stock on my shortlist at Rs 14.85. The stock has appreciated 13%, and was priced at Rs 16.80 at market close on May 17, 2013. The company has been paying a dividend between 8.5% and 15% in the past 4 years. It did not pay any dividend in 2008. So the dividend now stands at 8.9%. I have conflicting figures of EPS and Book value, from different sources. The EPS figures I have are Rs 4.7 and Rs 5.75, and the book value figures I have are Rs 18 per share and Rs 23.21 per share. For this analysis I am taking the lower figures. Based on the lower figures the Price to Earnings ratio is 3.6 and the price to book value ratio is 0.93 times. Last AGM the company had was in 2011. The stock does not look very exciting. However I would wait for the latest data before I put my money in this company.
Micro Tech
The stock is priced at Rs 8.20 as on May 17, 2013. The company has paid dividend between 10% and 20% between 2008 and 2012. So Dividend yield to last year’s dividend (10%) is at 12.2%. The book value is at a healthy Rs 200, but the latest EPS figure is a disappointing Rs0.44 per share. I lost some data but I think the company made a loss of around 43 crore in the quarter ended March, 2013. So, for now the stock is not a buy for me.
ABG Infralogist
The stock is quoting at Rs 47.90. The book value of the stock is at Rs 198 per share. The company has paid dividend between 40% and 100% in the last 5 years. So the dividend yield on last year’s dividend of 50% is 10.44% which is good. However the company made a loss and the EPS figure available is Rs -14 per share. Considering the book value and the dividend history I would take a small gamble in the company. However, a serious investment should be considered only when the latest Dividend and results are available. The last AGM was held in June, so hopefully we will have the latest numbers in hand in about a month.
Inventure Growth
The stock is priced at Rs 5.60. The company has paid dividend 10% dividend in the past 4 years and once it paid 30%. So dividend yield for 2012 is an impressive 17.86%. But that is where the story ends. The EPS is at a measly Rs0.15 and book value is at Rs 18. So there is seems no reason really to look any further. I will not invest in this company.
I will write about more companies and the prospects of investing in their equity as I start investing and do more research and find more stories. From now on I will only write about companies I decide to invest in.
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http://www.moneycontrol.com/stocks/marketstats/bsetopdiv/
Top 50 companies listed on the National Stock Exchange (NSE):
http://www.moneyworks4me.com/best-index/nse-stocks/nifty-50-companies
