Markets have been inching-up and investors are increasingly looking at opportunities that are difficult to find due to elevated valuations. This almost always happens in a rising market. However, we have found a few stocks that still offer great value to investors buying into them.
Coal India shares have fallen to an almost 52-week low of Rs 282. This is because the stock has gone ex -dividend only recently, but the stock does not deserve these valuations and is a great long term stock idea. The first is the dividend yield. At the current market price and assuming the board of directors maintains the same divided like last year, you would get a neat dividend yield of 7 per cent. This is tax free in the hands of the investors and hence the yields are better than bank deposits, which currently give just 6 per cent interest. Now, apart from this lets take a look at the fundamentals.
We believe that Coal India would hike coal prices at least twice this year, to reduce the burden of worker costs. We believe this could lead to enhanced earnings in the years to come. Rapid expansions and elevated Coal prices are other positives for the stock. Coal India is currently available at a p/e of just 10 times, one year forward earnings. This is relatively cheap compared to many global players. It is also a zero debt, cash rich company, which is another big positive. Check stock quote here
Power Finance Corporation
Power Finance Corporation is one of the top power finance companies in the country and one of the largest NBFC players. Today, it finances some of the largest power projects in the country. In the last year we have seen loan assets, total income and net profits of the company having surged. The government's focus on "power for all" by 2019, will result in the company doing well in the years to come. We believe this is one stock that is available at very cheap valuations which makes it a compelling buy.
This is probably one of the cheapest stocks to buy in terms of fundamentals. For the quarter ending December 31, 2016, the company reported an EPS of Rs 7.39. Even if the company reports an EPS of Rs 30, the stock is available at a valuation of just about 5 times one year forward earnings. This makes it the best stock to buy for the long term. Check stock quote of Power Finance
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