n our country, there’s lot of excellent companies, unfortunately, everyone else also knows how good they’re and hence, most of the time, their stock prices carry a premium. So what does retail investor such as you and that i do? can we pay the premium and price average our way in? Nope. there’s a much better way! Equity markets won’t always behave in a very rational manner. On any given day, the news of the day will drive it up or down – sometimes there’s no basis thereto. We all understand it – it’s happened, it’s happening, and it’ll still happen. As a protracted term investors, we always have patience on our side which we will use to our advantage.
Preparing for the Hunt
I haven’t talked to any tiger, but supported National Geographic and see Channels, i’ve got noticed that a tiger would never just rise up within the morning and opt for a kill. Same way you ought to not try and purchase company stock unprepared. Here are few steps.
§ Buffalo or Boar? Cow or cat? We must know what we are trying to find. A tiger goes for cows and buffalos supported his appetite, hunting capabilities, associated risk. have you ever see them going after elephants (too risky) or cats (not well worth the effort). Our homework must be tired advance to spot what company stocks would be good slot in our portfolio.
§ Where is that the best place? Tiger knows the watering holes or grazing fields. we should always understand the business and what price we are willing to tug the trigger. Tiger is a smaller amount likely to chase his kill on mountain tops. We won’t find right prices for our company stocks in mass media.
§ Do you have got sufficient bullets? Tiger doesn’t stalk his kill when exhausted; neither must you stalk your companies without cash readily available. We must plan ahead and ensure we’ve cash accessible when that stocks’ price falls below our target. Tiger doesn’t go full speed from start – tries to run down the prey for few seconds. Likewise you ought to start with starter positions with less cash. Don’t jump with all the profit hand.
§ Tiger gets the Kill. A tiger doesn’t expect to induce their kill at every stalking or within couple of minutes. Sometimes it’s stalk on multiple occasions or it’s to stalk for few hours. Saves energy like cash and goes after only if confident of own instincts. Stalking a corporation and looking ahead to dip to our buy price can take months or years, but within the end you may get a chance.
Does stalking work?
Yes, it does. I keep a watch of stocks together with their buy price range. I patiently watch for prices to fall in my buy range. Following are few companies on my watch list that i’m stalking for quite an while.
§ Blue Star Limited (BLUESTARCO) is India’s largest central air-con company. It focuses on the company and commercial markets. Amsonia tabernaemontana incorporates a good brand image and leading market share in Indian central air-con industry. it’s well positioned to require part in infrastructure growth and edifice construction. I expect the corporate to grow together with the expansion in Indian economy. My buy price range is Rs 175 to Rs 225.
§ Gujarat public utility Limited (GUJARATGAS) is India’s largest private sector company in fossil fuel transmission and distribution for industrial/domestic customers. Few key aspects that i favor about Gujarat Gas are its business model of gas distribution and practically debt free record. My buy price range is Rs 137 to Rs 156.
§ Asian Paints (ASIANPAINT) is India’s largest and Asia’s third largest paint company. it’s a vertically integrated paint company with in-house manufacturing facility. the economic coating segment consists of automotive coating, powder coating, and protective coating. One notable aspect that I favor about Asian Paints is that, it’s been ready to expand globally without absorbing an excessive amount of debt. My buy price range is Rs 626 to Rs 826.
§ Lakshmi Energy and Foods Limited (LAKSHMIEFL) is engaged in manufacturing and processing food grains and related products. it’s taken quite an little bit of debt to fund capacity expansion and entering new markets. An intriguing company, which might be a chance, depending upon price paid. Since it’s in transition, stock price within the market is battered down. My buy price range is Rs 63 to Rs 73. I got my kill!
§ Praj Industries (PRAJIND) provides turnkey plants and equipments for fermentation and distillation systems employed in bio fuels processing. it’s been battered by block in its primary product segment. But, i prefer company’s recent moves to diversity its product base, negligible debt, specialize in environmental engineering projects, and management’s part philosophy. My buy price range is Rs 63 to Rs 68.
§ Visaka Industries Limited (VISAKAIND) is engaged in two businesses viz., building products and textile synthetic yarn. the realm of concern is recent debt binge. it’s more debt than its ability to get cash from its operations. I consider this as risk which has to be monitored. This increases sensitivity to economic downturns. My buy price range is Rs 153 to Rs 186. I got my kill!
§ NIFTYBeES ETF is low cost fund that tracks NIFTY index. I invest in open-end investment company to trace the expansion in Indian economy. My buy range is below PE17 which is historical average for previous couple of years.
- VST Industries is one of the premier cigarette companies in India. It ranks just after ITC. They have been consistently been paying high dividend for years and it is a great buy at any level.
All stocks persist sale at some point in time. we want to exercise little patience, stalk them, and let our greatest wealth building asset work for us.
What companies are you stalking? At what price will you pull the trigger?
Disclosure: Long on LAKSHMIEFL and VISAKAIND at the time of this writing.