It’s not very often one gets a good company at dirt cheap valuations. Well, these days it is not uncommon to find such stocks because a lot of stocks are trading 40-50% or even 60% below their recent highs.
Not every stock will recover, however a good company run by a good management team and strong balance sheet will probably go on to deliver huge returns from the depressed valuations.
One of our investment theses is to find a good company going through a temporary bad phase, because when good times come these are the first ones to pounce on the opportunity and go on to deliver multibagger returns (a combination of growth in earnings and re-rating of valuations from depressed state to frenzy state).
It’s like Heads you win big, tails you don’t lose much.
We believe we have found one such opportunity and have shared the report with our premium members. The new recommendation is also part of our Model portfolio.
If you understand the fact that market movements are cyclical and it’s always good to invest during bad times, you shouldn’t miss out on the latest pick and make the most of it by subscribing to Premium Membership before 28th Feb’19. Register yourself HERE
Its during times like these one sows the seeds of multibagger opportunities in one’s portfolio and we are glad to have identified an investment opportunity which is expected to record ~23% + CAGR in earnings for next few years and still available at reasonable valuations.
As on date, we like several points about the company and they are as below:
Earnings expected to record 23% + CAGR – We carried out a small exercise of numbers and based on the same we found that the current valuations incorporate most of the risks and therefore the scope for further correction is low while there could be huge upside as the markets and the earnings recover from the low base.
Major correction in stock price: Yes, the stock is down more than 50% from its recent highs. For a high quality company with a very strong track record and strong balance sheet, we believe the recent correction offers a good opportunity to invest in the stock from the perspective of next 3-4 years.
Major CAPEX already behind – The company has recently completed a major CAPEX programme. With the same the company has sufficient capacity to maintain high growth rate for the next 4-5 years.
Despite the CAPEX, the company’s balance sheet is still very strong with low debt to equity ratio and even the cost of debt is also very low.
Industry growing at 15-20% – The industry in which the company operates is expected to maintain 15-20% CAGR over the next few years. The reason for strong growth is very low penetration in India.
Get access to our latest pick by subscribing to one of our Premium Memberships before 15th Feb’19. The new recommendation is also part of our Model Portfolio.