Thursday, October 1, 2009

Stock Picks - October 2009

Alright then. Seems like the bulls are back on the Index. No more of the Doji Patterns. Although I feel a little skeptical, am bullish on mid-term growth.
Here are my picks for the month of October.
First of the pack:

Banking Stocks:
  • Allahabad bank - Is trading in the 110-120 levels. Decent P/E ratio @6. Strong earning data. 
  • Canara bank - Trading at 315 odd. As good a P/E ratio as Allahabad bank. But much stronger earning data @Rs 50/sh. 
  • Corporation bank -  Again, as good a P/E ratio as both Allahabad and Canara banks. Yet, the strongest earning data @Rs 60/sh. Best buy. 
  • Stocks like SBI, HDFC Bank, ICICI bank, have unreasonable P/E ratios which range in the 20's and the 30's. Remember- lower the P/E ratio, better the buy. Yes Bank, well.. I feel its had its run. Modest P/E ratio @19.. but earnings per share aren't really exceptional.
  • However, also take note.. The banking sector is a little risky at the moment - especially with the credit and bad-loans problems still hovering, its best stay away from banks with high risk portfolios.
Power Stocks:
  • Suzlon, Suzlon & Suzlon! Currently tradin in the 90's, this is one of the most lucrative buys. At the moment, its P/E ratio looms in the negative. Not a bad sign. Has undergone a rough phase with losses due to faulty turbine systems. But now that that issue is resolved, its got nowhere but to move up. Already 3times its 52-week low of Rs30/sh, this is my favorite pick. Why? The Copenhagen Climate Summit coming up in December is going to be one where the global political community will unite to save the Earth from the menaces of Global Warming. We could be looking at heavy investment in renewable resources of energy as key points of the climate change agenda. Which is why, a wind-energy co. like Suzlon would be the first ones to benefit. 
  • Lanco Infratech - Lets keep figures and valuations aside for this script. Lanco can't fail its investors, atleast until the next Lok Sabha general elections. Its chairman is a Congress MP. And statistics tell us that between 2004-2009, the wealth of politicians on an average grew by almost 600%. Anything else to say?
  • RelianceComm. - With a P/E ratio of 10, compared to competitors with P/E ratios in the 20s this stock simply is the best bet in an ever-growing sector. 10 - 15 million subscribers are added every month. Doesn't look like this sector will lose any steam in the near future.
Group B stocks/etc:
  • Redington India - With major mutual funds such as SBI and India Man MF picking up sizable stakes in the company, one can simply coattail. However, with decent earning per share valuations and P/E ratios, this isn't just a coattail pick.
  • VST Tillers & Tractors - With a strong leadership and management, and the diwali season coming, VST seems a great buy. This one has had a great management for over 17 years. Which is credible in itself.
  • I haven't really fallen in love with any realty stocks yet. But with Diwali coming up, we could see a boom in sales. You could consider realty stocks in that matter.
  • On paper, infrastructure stocks seem like anyone's delight. However with the delays that come along with any infra. project in India.. we could see a lot of volatility. Which sort of ruins the margin of safety. Again your pick here.
Lastly, Reliance Industries.. with the largest market cap at 3Lac Crores and the able leadership of Mukesh Ambani, is one of the safest buys. No matter the dispute with RNRL over the KG basin, this script won't fail. Pick up at levels between Rs2000 and Rs2100/sh.

With this, I wrap up stock-picks for the month of October. Will post results at the end of the month comparing the performances to the market index itself. 

Please be advised that any purchases done by you on the basis of the above recommendations will be solely at your discretion. The author shall not bear any consequences to losses/profits incurred. 

Sources: P/E ratios - Business Standard Section II. Rediff money. Bloomberg news.



  1. :O whoa.

    And how much research went into this?

  2. Haha. The stocks? 2 weeks of constant following. The principles. Umm. Ever since I learnt about them. :)

    I'll post results at the end of October. Lets see how much I beat the market by -if at all I do.

  3. As of 18th October, 2009.

    All. Bank -- 115/share (1st october):: 128/share (As of 18th oct)
    Canara Bank -- 315/s (1st) :: 385/s (18th)
    Corporation Bank -- 430/s (1st) :: 258/s (18th)

    Suzlon -- 92/s (1st) :: 89/s (18th)
    Lanco Infratech -- 483/s (1st) :: 566/s (18th)
    Reliance Comm. -- 305/s (1st) :: 238/s (18th)

    Redington Ind. -- 255/s (1st) :: 259/s (18th)

    VST Tillers -- 385/s (1st) :: 418/s (18th)

    Reliance Ind. -- 2050/s (buy-tip) :: 2225/s (18th)

    8 recommendations. 6 in profit. 2 in Loss.

  4. Total money invested (buying only 1 share of each stock recommended = Rs 4430

    Total return on investment = Rs 4566

    Market increased by: 1.015%
    My portfolio increased by: 3.20%

    Minus Reliance Communications gain: 4.9%

    Mediocre performance.

  5. Correction:

    Corporation bank is 458/s (as of 18th oct. Not 258!)

    Therefore, Total return = 4566+200 = Rs 4766

    Therfore, Portfolio rise (in percent) :: 7% and not 3% -- Which means, I beat the market by over 6%!