If you are a long term investor, you tend to always make returns in equities. In fact, equity shares have known to outperform other asset classes in the long term. We have selected a few stocks that offer great opportunities for long term investors. These include stocks that have a very low debt to equity ratio and which have shown good growth over the years. These stocks have the tremendous potential to generate money in the long term.
Some of them are from very fast growing sector like construction, agrochemicals and ofcourse, the fast improving PSU banking space.
Rallis India has to be a great pick from the pesticides and agrochemicals space. To begin with the government plans to double the farmer income in the next 5 years.
The huge outlay towards the agriculture sector, is a big positive for a player like Rallis India.
The one good thing about the stock is that the fundamentals are very much in place. The debt to equity ratio is less than 0.10 and the company reported a PAT growth of whopping 440 per cent for the quarter ending June 30, 2016.
The stock has a p/e of 15 times, which makes it an ideal pick, if it keeps growing at the current rates.
Rallis India is a Tata Group company and the stock last closed at Rs 221. Rallis India has to be among the best stocks to pick for the long term. The Union Budget 2017-18 has also given a big boost to the agricultural sector by announcing a host of reforms. All this make Rallis India a good pick from the short term.
This is a popular company in the Lingerie business. Again, this is one company that reported a solid quarterly performance. The company reported a net profit growth of 250 per cent for the quarter ending June 30, 2016.
The company has a very small equity capital and reported an EPS of Rs 7 for the quarter ending June 30, 2016. Even if it continues to show the same momentum it can report an EPS of Rs 20 for 2016-17.
The stock is trading at at a 1-year forward p/e of just 14 times, which makes it a great long term pick.
Shares of Lovable last closed at Rs 277 on the NSE.
Again, one of the best shares for long term investment.
Hindustan Construction Company is one of the oldest construction companies in India. It has built the prestigious Bandra Worli link across the sea and has a host of other marquee projects.
The list of firsts to the company's name is virtually endless. HCC constructed the first Thermal power plant in Mumbai. Apart from this it also built the first water treatment plan in Mumbai, as also the first underground power house in Bihar. Apart from this it also constructed the first port impounded dock in West Bengal, and the nation's first nuclear power project.
The stock is a good long term play for two reasons.
One is that the government recently allowed arbitration awards to be settled quickly. The company issued a statement saying that it would help reduce the company's debt by half. This will benefit the company tremendously going forward.
Apart from this, the company has a sizeable order book position, which will leave its hands-full for the next few years.
The shares are a good long term investment story at Rs 41.
If one has to bet on high beta, at the moment, it has to be government owned banks. Syndicate Bank has always had its non performing assets under control, much better than some other government banks.
In fact, most government owned banks have seen their NPAs go out of control.
There are a number of reasons to recommend the stock of Syndicate Bank as a best long term investment buy. One is that we believe that the worst with regards to bank NPAs is behind us.
The second is that with economic recovery gathering momentum, it could benefit a bank like Syndicate Bank tremendously.
The third is that unlike most PSU banking stocks, the stock has not rallied too much and remains a good long term story for those who can hold for 3 years. The shares were last trading at Rs 78 on the NSE.
If you are looking at a company with a small equity, low price to earnings ratio, low debt and no pledged shares of the promoter, Kiri Industries has to be it.
The stock is trading at a 1-year forward p/e of just 10 times.
The company reported a 150 per cent growth in net profits for the quarter ending June 30, 2016. This is an excellent long term stock to buy.
The company is the largest player in the dye and intermediaries business.
Lloyd Electric is another company that has reported a phenomenal set of results for the quarter ending June 30, 2016. The company reported an almost 400 per cent jump in net profits.
Lloyd Electric is a manufacturer of heat exchangers, Railway HVAC systems, airconditioners etc.
This company is likely to benefit from growth in the economy and increase in spending by the railways.
The company reported an EPS of Rs 12 for the quarter ending June 30, 2016. If it continues to do well, we seen an EPS of Rs 45 at least, which leave the stock at a p/e of just 6 times. Not a bad bet at the current levels of Rs 259.
The story of Canara Bank is almost similar to that of Syndicate Bank. It remains a better managed bank in terms of NPAs, though we must admit that the stock has run-up sharply in the last few months. Should we see the stock fall, it could be a good share to buy for the long term.
This bank could be a major beneficiary of the economic momentum that we are seeing. A good long term stock to buy.
HDFC Bank has to be the best long term investment stock.
If you are looking at a safe investment bet, it has to be HDFC Bank. The bank has a habit of showing 20 per cent growth, when quarterly numbers are announced and has very low level of NPAs.
The stock is near the 52-week low and a buy on dips strategy would be good for the stock.
A great buy at the current levels.
Taxation of shares
It is important to note that shares do not attract a long term capital gains tax. However, if you sell shares before one year, they attract a sort term capital gains tax of 15 per cent. So, before investing it is very important to consider the tax liability on the same. On the other hand it is also important to note that the tax liability is almost similar to those of equity mutual funds. One important thing to note is that there is no long term capitals gains if you hold shares and sell them at a profit of more than one year.
The article is not a solicitation to buy, sell in securities mentioned in the article. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article.