Markets have fallen a tad bit, in the last few days. The Sensex and the Nifty p/e multiples continue to remain at elevated levels, as results have been poor. In fact, the Sensex p/e at 20.65 times is not very cheap, considering the historic average of 17 times. Nonetheless, if you are investing now it is best to do so in small amounts. Here are a few stocks that you can buy and reap money in 2017.
All Cargo Logistics
This is a stock that has fallen a good bit from levels of Rs 220 in August to the current levels of Rs 180, giving an opportunity for investors who are looking at some of the best shares to buy for 2017. The company is among the bigger logistics players in the country and its MTO business has been growing rapidly. Now, there are a number of reasons, why All Cargo Logistics might see enhanced activity in the next few years. The first is that the company is undertaking a few expansion plans, which would boost revenue and growth at the company along with the takeover of the Avashya Logistics.
Benefit through rapid expansion
The company's Kolkata CFS is expected to start operations by the first quarter of calendar 2018. The capacity addition is likely to be 100,000 TEUs. Land for the CFS business activity has already been leased and the capex is around Rs 35 crores. The Jhajhar ICD of the company is also expected to be completed in the nest two years. The contract logistics businesses in Asvashya will also be accruing to the company early next year. This is expected to boost profits in the coming years.
Fundamentals of the company look good
For the Financial Year 2016-17, the company can report an EPS of Rs 12, while the same can be higher at Rs 14 for FY 2017-18. Now, if you discount this at around 20 times, one can expect a price of Rs 280 at the very least for the stock price in the next two years. Not a bad stock to buy, if you are having a 2-year perspective in mind.
Development Credit Bank is a small midsized bank that is growing rapidly. This stock has fallen recently from levels of Rs 132 to the current levels of Rs 104. However, this could remain a good share to buy in 2017, for a number of reasons. The first is that we expect interest rates in the economy to fall even further. As growth rates in the economy pick, the bank is likely to do well. It already has rapid expansion plans for branches that it proposes.
Low level of NPAs
At a time when the banking sector is reeling under non performing assets, DCB Bank has managed to show a superb performance on that count. For example, the gross non performing assets for the quarter ending Sept 30, 2016, was placed only at 1.75 per cent. In fact, the net non performing assets are also very low at 0.84 for Q1 2016. Now, most small and large private sector banks command a hefty p/e multiple. We believe that this is not the case as far as far as DCB is concerned. The bank is likely to report an EPS of Rs 8 for 2017-18. Even if we assume a p/e of 20, the stock should not trade below Rs 160 in the next couple of years. This makes the stock a good bet at the current levels. One of the best shares to buy in 2017.
DCM Shriram is a well diversified company and its businesses include a range of products like urea, sugar, hybrid seeds, caustic soda, chlorine, PVC resins, PVC compound and cement. The company has been consistently reporting good numbers and is a good profit making company.
This is probably one of the most undervalued stocks from the midcap space considering valuations of the company. The company reported an EPS of Rs 6.18 for the quarter ending Sept 30, 2016. It can report an EPS of Rs 24 for the full year 2016-17. Now, the stock is trading at a p/e of just around 8 times one year forward earnings, which makes it rather cheap. In fact, the price to book at 1.5 times, also makes the stock attractive. If you have a long-term perspective in mind, this is not a bad stock to own.
From voltage stabilizers to water heaters, V-Guard makes several products. In fact, it's product range is very vast and includes inverters, inverter batteries, switch gears etc. The company, which was always considered a regional player, has fast expanded to being one of the serious domestic players.
There a number of reasons to recommend the shares of V-Guard. The first is that the company is rapidly expanding its product portfolio and changing product mix to enhance margins. It has already engaged in a good brand building exercise, with the brand today relatively well-known. It is also expanding its dealer network rapidly and this should benefit the company.
Fundamentals of the company
The company reported a good net profit for the quarter ending Sept 30, 2016. The net profits of the company rose to Rs 39.20 crores from Rs 23 crores in Sept 2015. We believe that going with the above, the company can most likely report an EPS of Rs 8 for 2017-18. Companies in this space have a very high p/e of 30 to 40 times. If we apply the same p/e for the company it can easily trade at Rs 240 to Rs 320 over a period of time. Hence, if you have a long term perspective in mind, you can buy into the stock.
Bank of India
The larger government owned banks are likely to be the major beneficiaries of the recent de-monetization scheme, as large amounts of cash have been deposited in these banks. We believe that it is just a matter of time, before things start improving with government owned banks, particularly with regards to their non performing assets. If you are looking to a more long term view, say for example 2 years, it would not be a bad idea to buy into government owned banks. We believe that there is a bright possibility that non performing assets improve going forward. This should make the stock attractive in the near future.
The article is not a solicitation to buy, sell in securities or other financial instruments. 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. The author and his family do not own any shares in the above mentioned stocks.