Few days back we released a detailed note on our Latest Alpha stock which is a small consistently growing debt free company with operations spread in India and few other countries and available at low valuations.
Most of the stocks covered by us in the past have been small/micro cap companies with clean balance sheets, easy to understand businesses, high promoter holding and good growth prospects and we believe that our recently selected stock has similar attributes.
You may have missed out on several high quality and high yielding stocks of the past, but you can get your hand on Latest Alpha stock by subscribing to either of Alpha or Alpha + before 29th Feb’16. Register yourself HERE and subscribe our services for high quality research and regular updates on the stocks.
Details on latest Alpha stock
The company that we are discussing about is a sub 500 crore market cap company and as per various reports it is amongst the top 5 players in its area of operations. The company is totally focused on its core competency and intends to build upon the same both domestically and internationally through expansion in manufacturing facilities and exports.
We believe, in India there’s good scope for growth in almost all the segments, especially products related to household consumption, however what is important is to identify the right company with experienced promoters/management and strong balance sheet and this is where our latest Alpha stock fits in perfectly with its small size, experienced promoters and debt free (there’s surplus cash) balance sheet.
Management – In the past the company did make mistakes by venturing into unrelated business, however what is important is that sooner than later management realized the merit of focusing on core operations and strengthening the same than wasting time and energy over smaller, non-scalable and non-profitable operations.
While mistakes are bound to happen, what is also important that there are certain things management has done differently (more about those in the detailed note shared with the members) and the company has reaped significant benefits of the same.
In small family run companies, it’s important from minority shareholder’s perspective that promoters own a large chunk of stake in the company and in the case of latest Alpha stock, promoters own more than 50% stake and have not diluted equity in the last several years.
Operating Performance – If both the business and the management are good, it should reflect in the operating and financial performance of the company.
We strongly believe in the consistency of the past performance or improvement in operating performance based on carefully analyzed data and the current strength of the balance sheet to support the future growth and in the case of latest Alpha stock we find all the three.
Over the last several years the company has consistently reported 15% + CAGR in sales and profitability and the return on capital employed has also averaged in excess of 15%.
With complete focus on single line of operations and planned replication of successful initiatives of the past, we believe there’s high probability of much higher growth in sales and profitability and improvement in return ratios to over 20%.
As far as valuations are concerned, the stock is currently quoting at ~11 times FY 16 (E) earnings with average post-tax ROE of ~20% for FY 16. The company is debt free and has been consistently paying out dividends since the last few years.
Note: This not an investment advice. The performance data quoted at www.katalystwealth.com represents past performance and does not guarantee future results.
Thinking of wealth creation: Well get your hand on latest Alpha stock by subscribing to either of Alpha or Alpha + before 29th Feb’16. Register yourself HERE and subscribe our services for high quality research.
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