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Best stocks to buy in 2020

Best stocks to buy in 2020 for “Long Term” 

 

What Factors Should Investor Look At?

Investors/traders should make qualitative as well as quantitative studies for the underlying company of the stock. Below are some of the most important factors for selecting stocks to buy for long term investments.

1.Financial Strength

Investors will have to check the company’s financial statement, find out whether there are issues or not. Also, operating profitability, leverage, income, and liquidity ratios must be judged.

2. Business Model

Investors need to see whether the business model of the company is sustainable for future events and disturbances.

3. Management of the Company 

Investors need to study the top management profile and working style as well as the time horizon with the current company.

4. Company Competetive Advantage

Investors need to study the factors that are responsible for providing a competitive edge to the company is present and whether these factors will help in the future.

Let’s look at the top stocks to buy for long term investment.

 

Read more on Margin Securities: www.marginsecurities.com


 

1. Asian Paint

Asian Paints Limited is India’s largest and Asia’s fourth-largest paint manufacturing, along with distribution and selling. Asian Paint has also ventured into the home décor segment also.

Asian Paints has its business spread across the globe, now it operates in more than 60-66 countries. Asian Paint has 25 manufacturing units/venues around the globe. 

The company had been debt-free and its entire operation has been funded by equity and earning per share.

The return on equity parameter has been excellent at 25-30%. The company also pays a healthy dividend to its Shareholders. Asian paints have diversified its paint division vastly.

Company Current Market Capitalization on the Bombay Stock Exchange: 157000 Crores

Current Market Price        

1636    

Margin Securities Target Price

 1994      

 

Current Market Price

1636  

Market CAP (Rs. Crores)

157000

P/E

64.46

EPS (Trailing 12 Months)

22.60

Industry P/E

62.86

10-year CAGR of PAT

21.92%

 

2. Bajaj Finserv 

Bajaj Finserv Ltd has provided excellent returns in recent years.

ln 2010 the Bajaj Finserv stock was traded on Bombay Stock Exchange at Rs. 330-350. Today, the value of the stock is Rs. 5200. 

Bajaj Finserv is in the business of providing loans or credit for appliances, automobiles, etc. The company has been successful because of the innovative loans or credit products it offers to the customer, making the shopping experience hassle-free.

The company has recently been an integral part of almost all motor shops and brick, e-commerce, etc. 

The business model seems sustainable and is poised to make larger businesses given India’s growing economy and disposable income.

The capital adequacy ratio and other parameters linked to NBFC (Non-Banking Financial Companies) are above the benchmark.

Company Current Market Capitalization on the Bombay Stock Exchange: 83100 Crores

Current Market Price        

5223    

Margin Securities Target Price

 6163      

 

Current Market Price

5223  

Market CAP (Rs. Crores)

83100

P/E

39.55

EPS (Trailing 12 Months)

192.65

Industry P/E

39.64

5-year CAGR of PAT

11.72%

 

3. Infosys

Infosys Limited is the second largest Information Technology firm in India.

Infosys derives 60% of its revenue from the US, another 37% from the UK and the rest of the world, and just 3% from India. In the Indian competition, with a push to digitalization, lots of small and medium IT companies have erupted to eat up the market most share.

IT sectors might generate good returns for traders/investors in the coming years.

With recent past incidents of management issues, this company is strongly thriving back to gain more market share.

Investors all know that demand for technology-oriented services is increasing and this IT firm stands a pretty good chance of grabbing opportunities and increasing its bottom line.

Company Current Market Capitalization on the Bombay Stock Exchange: 304890 Crores

Current Market Price        

716    

Margin Securities Target Price

 850      

 

Current Market Price

716  

Market CAP (Rs. Crores)

304890

P/E

20.49

EPS (Trailing 12 Months)

35.32

Industry P/E

23.68

10-year CAGR of PAT

15.32

 

4. Kotak Mahindra Bank

Kotak Mahindra bank has earned its position in the top banks in India, though being much newer than many other banks. The bank has delivered excellent growth, starting from its inception in market 2003.

Kotak Mahindra Bank is the third-largest bank in terms of market capitalization after HDFC and ICICI bank.

If Margin Securities consider bank performance parameters such as capital adequacy ratio, non-performing asset, etc. Kotak Mahindra Bank is way ahead of the minimum benchmark required.

Kotak Mahindra Bank has also ventured into the digital space by launching its digital wing called ‘Kotak 811’, which has been a huge success. The bank had merged with ING Vyasaya Bank to realize synergies of operation. Also, this has enabled us to enrich a bouquet of financial products offering and lower cost of operation.

The bank has experienced growth from all the business fronts, which seem sustainable. It has increased its market penetration multifold and is poised to make double-digit growth.

Company Current Market Capitalization on the Bombay Stock Exchange: 264000 Crores

Current Market Price        

1332    

Margin Securities Target Price

 1705    

 

Current Market Price

1332 

Market CAP (Rs. Crores)

264000

P/E

38.03

EPS (Trailing 12 Months)

36.44

Industry P/E

37.96

10-year CAGR of PAT

28.01%

 

5. Maruti Suzuki India Ltd. 

Maruti has given good results over the years with a healthy profit margin. The introduction of NEXA, a segment for the premium car was well accepted and appreciated by the market.

Though last year had not been very good for Maruti even not good for the auto sector, due to revenue not meeting the target sales figure, the company is now striving to sell more by delivering innovation both in terms of technology and passenger comfort.

Maruti Suzuki has signaled the launch of new versions of cars as well as new models complying with regulatory and safety norms.

Company Current Market Capitalization on the Bombay Stock Exchange: 171103 Crore

Current Market Price        

5675 

Margin Securities Target Price

 6880   

 

Current Market Price

5675

Market CAP (Rs. Crores)

171103

P/E

29.70

EPS (Trailing 12 Months)

55.69

Industry P/E

25.64

10-year CAGR of PAT

17.31%

 

6. Pidilite Industries

Pidilite Industries Limited is the manufacturer and marketing of the famous product in urban and rural market “Fevicol” and “Fevikwik”. They are the market leaders in the adhesive segment.

The brand value and brand equity associated with Fevicol are very high and hence, there are only a few substitutes in the market.

Pidilite also produces products like waterproofing solutions, industrial resin, sealants, construction chemicals, etc. Pidilite continuously innovates its product offering, which makes its business model different and sustainable.

One of the major strengths of Pidilite Industries is its distribution channel. Pidilite Industries distribution and marketing in the rural and semi-urban market is the best in the country.

Return on equity for Pidilite has been excellent and it hovers around 27.1%. The stock has moved from Rs. 50 in 2009 to Rs. 1,290 in 2019. Pidilite also a debt-free company.

Company Current Market Capitalization on the Bombay Stock Exchange: 74000 Crore

Current Market Price        

1457 

Margin Securities Target Price

 1806   

 

Current Market Price

1457

Market CAP (Rs. Crores)

74000

P/E

70.29

EPS (Trailing 12 Months)

18.38

Industry P/E

46.26

10-year CAGR of PAT

24.10%

 

 

7. Sun Pharmaceutical Industries

Sun Pharmaceutical Industries Limited is a pharmaceutical company that also derives the majority of its revenue from the US.

With the recent incident of a halt in the manufacturing of drugs due to non-compliance with USFDA norms, this stock has seen a lot of volatility this year. But after Coronavirus Outbreak this stock from the 52-week low 315 to 499 (Approx 58% growth), but now outlook stable or positive for the Sun Pharma.

The company has recently shifted from generic pharmaceutical to the specialty segment.

These products were delayed due to compliance standards by the USA. Now, most of its medicine or/and drugs have cleared the compliance norms and are all set to be launched, marketing, and sell in the market.

Sun Pharma is also aiming to grow its domestic business by aiming specialty drugs in cardiology, CNS, and gastroenterology.

Its generic drug portfolio for the domestic market has an 18% market share, which this company plans to leverage and increase by introducing more technical complexity.

Company Current Market Capitalization on the Bombay Stock Exchange: 119760 Crore

Current Market Price        

499

Margin Securities Target Price

 610 

 

Current Market Price

499

Market CAP (Rs. Crores)

119760

P/E

33.48

EPS (Trailing 12 Months)

13.81

Industry P/E

29.79

10-year CAGR of PAT

10.10%

 

8. Titan Company Limited

Titan Company Limited is a subsidiary or child company of the parental company Tata group. The company is the fifth-largest integrated/customized watch manufacturing company in the world.

Investors are all well aware of its product ‘Sonata’, which is one of the most reputed watch brands.

This brand also came up with FastTrack, one of the most popular and trending watch brands in youngsters. The company also launched ‘TANISHQ’, India’s leading and most trusted jewelry brand.

Titan also a debt-free company as its result book Also, the return on equity has been on the higher side and good of the company.

Company Current Market Capitalization on the Bombay Stock Exchange: 87000 Crore

Current Market Price        

977

Margin Securities Target Price

 1252

 

Current Market Price

977

Market CAP (Rs. Crores)

87000

P/E

57.28

EPS (Trailing 12 Months)

15.38

Industry P/E

84.81

10-year CAGR of PAT

27%

 

9. TCS (Tata Consultancy Services)

Tata Consultancy Services Limited is the largest IT company in India. Tata Consultancy Services had recently crossed $ 100 bn market cap. Also, in the previous 10-15 years, TCS has consistently delivered double-digit growth. TCS is the biggest/largest contributor to the "Ratan Tata" Tata Son Group of business.

The world is moving towards advanced computing, technology-oriented strategies, digitalization, etc. This has fueled the demand for information technology services.

Also, this demand is in recursive nature, hence it is bound to re-occur with the more sophisticated requirement.

Company Current Market Capitalization on the Bombay Stock Exchange: 765001 Crore

Current Market Price        

2038

Margin Securities Target Price

 2700

 

Current Market Price

2038

Market CAP (Rs. Crores)

765001

P/E

25.43

EPS (Trailing 12 Months)

83.87

Industry P/E

23.68

10-year CAGR of PAT

22.27%



 

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