Midcap stocks have been on a roll since the start of the year. In fact, both mid cap and small cap indices have outperformed the benchmark indices by a distance.
Midcap stocks have smaller capitalization as compared to larger cap stocks. Since that is the case, they tend to move faster and fall faster than the markets. We have selected a few best midcaps to invest in keeping in mind the potential for the sector.
We have listed a number of public sector banks as buys. Union Bank is one of them.
Firstly, there is tremendous consolidation happening in the PSU banking sector. Take a look at SBI merging with its subsidiaries. There are reports that larger government banks like Union Bank would merge with smaller banks.
Secondly, we believe that from next quarter asset quality of the banking sector would improve, improving prospects for Union Bank. At, Rs 135, Union Bank shares remain the best midcap stocks to invest in.
Exide Industries is one of the biggest beneficiaries of GST implementation.
Consider this: Almost 40 per cent of the players in the industry are in the unorganized sector. When they come under the purview of GST it will benefit a player like Exide tremendously. Secondly, the company has diversified into a host of areas like LED.
We see the company's future as bright, given expansion and diversification and benefits from GST. The stock last closed at Rs 178.
Can Fin Homes
Can Fin Homes has seen a jump of almost 115 per cent in its net profits for the quarter ending June 30, 2016, as compared to the quarter of the previous year.
Housing finance companies are expected to do well, given the under penetrated housing market and rapid urbanization. A great buy at the current levels of Rs 1,425.
Bank of India
Bank of India like Union Bank of India is likely to be a beneficiary of consolidation and mergers in the banking sector.
Fresh capital infusion from the government and peaking of NPAs, make the stock an interesting buy at Rs 115.
Remember, the stock has touched a high of Rs 230 in 52-weeks.
GIC Housing Finance
Today, it is almost impossible to get a decent fast growing housing finance company under Rs 300. GIC Housing Finance like Can Fin Homes has reported whopping growth quarter on quarter. The company's shares are a good play on the booming housing finance business. The stocks is a good pick at Rs 294.
Tata Elxi is one stock that has given negative returns during the last 1 year. However, the company reported a superb set of quarterly numbers for the quarter ending June 30, 2016, where net profits surged to Rs 41.92 crores from Rs 35 crores, in the same period of last year. At the current market price of Rs 1633 the stock is not a bad bet.
The tiles business faces heavy competition from the unorganized sector, which accounts for 50 per cent of the market. When GST is implemented, tax evasion may not bee possible and the price advantage of the unorganized sector would disappear. This would benefit a company like Kajaria Ceramics, whose margins could improve.
The plywood business sees almost 70 per cent market share coming from the unorganized sector. Like Kajaria Ceramics, the company will stand to gain from GST implementation. Among the best midcap stocks to buy for the long term.
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