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My Long Term Picks

I know I’ve said this is a short to medium term blog, but given the requirement that some of us need to invest for the long term, I have some stocks that I really like for the 3 to 5 year holding period.

Large Cap: Ashok Leyland
With the new highways coming up soon, the truck traffic is bound to pick up. Interest rates will see a slide in the next year as the Fed reduces rates, and that will increase sales for truck majors – Tata motors is one, but Leyland provides greater upside from its currently (low) P/E of 10 or so. Current price is 37, and I’m looking at between 70 and 100 in the long term.

Small Cap: Kamat Hotels
A second rung hotel chain that has a big hotel in Ecotel, Mumbai and several small/mid size hotels in Pune and Nagpur, this scrip is interesting for the upside potential from its 10 P/E. With a huge FCCB issue convertible at 220+, the company is now getting ready to set up its acquired property in Pune and has more stuff coming up. Good pick below 180, and its current price is 166.

Large Caps: Dr. Reddy’s Lab, Ranbaxy
Big pharma and global companies, the two feathers in India’s pharma foray are to be watched closely in the next four years. As baby boomers in the US retire, as drugs come off patent, and as research spend starts to materialise, these two will end up making a significant margin increase. They’re not cheap but have a lot of potential. (Ranbaxy at 425, DRL at 660)

Mid cap: Axis Bank
Armed with a new name, the new face of UTI Bank is an aggressive bank that’s shaking off its past and moving into interesting territory. Watch the space.

A word of caution
Firstly – a disclaimer: I either own or have an interest in the above stocks.

Secondly – nothing works over the very long term. You can’t buy these stocks and forget about them. If the price drops a huge amount, you must reconsider them. If the financial results show a drop, you must reconsider them. I may not do so for time constraints.

Investing is not about forgetting about where you put your money. If you want to make any real money in the markets, please take a little while to review your positions, at least once a month. I would recommend once a week, but that seems to scare a few people – but why would you not care about the only thing that will work for you, while you’re working away for someone else?

  • Crick_Love says:

    >”Nothing works over real long term” ..very true in Indian markets with so much of movements..Thx again for your valuable postings and disclosures

  • Anonymous says:

    >Hello Deepak,
    Here are 3 stocks that I’d like you to look at:
    1. Bharat Bijlee: Probably one of the last few stocks in the power utilities space that’s available cheap. At an estimated 180/- earnings for FY08, the stock is at 14 PE. Strange but true, this stock had moved to sub 2000 in the recent market correction in Aug, and is now at 2590/- as I write. Looking at the order book, it’s hard to reason a fair price of 3200/- from current prices.
    2. Indian Bank: Look at it’s PE(7), look at it’s NPA(best among all PSU banks) and look at it’s advance tax numbers. I am holding on till 190/- happens. Although that too is a rather cheap price to sell.
    3. Omaxe: Dirt cheap, for a real estate company whose NAV is widely estimated in the 445-470/- range. It had moved to 280/- levels in August from where yours truly had picked it up and is now at 330/- levels. Potential upside of 20% cannot be ruled out.

    To Deepak and you all reading this post: just look at the number of Mutual Funds who are holding these, or have upped their holdings in these. I am not saying these are the best money can buy but if you are in the game for a 20% upmove in a 3-6 month timeframe, welcome to the club.

    I am hoping to hear from you Deepak on all these 3.