A few government owned companies still have tremendous value and are traded way below their long-term averages. Some of these offer great dividend yield, are monopoly businesses or there are tremendous entry barriers. Most of these stocks are trading way below long term averages and offer good value. Here are at least three such stocks.
GAIL Ltd offers good value proposition, as the shares are trading very close to their 52-week low. The current market price of the stock is Rs 117, while the low is around that Rs 113 mark.
The shares have fallen sharply following quarterly numbers that were not too impressive. Nonetheless, the shares are trading at a price to earnings of just 10 times and offer a dividend yield of nearly 5 to 6 per cent.
The company's gas pipeline business has strong entry barriers. Given the future demand for clean energy, natural gas demand is bound to rise. The company also has a presence in petrochemicals and E&P.
Apart from this, the company has holdings in Mahangar Gas, Indraprastha Gas and scores of other profitable ventures, where the holdings itself runs into crores. The shares have the potential to generate long-term value to shareholders.
This stock too is trading way below its long term average. The dividend yield on the stock is near the 5.5 per cent mark. Again, ONGC is a virtual monopoly business, with a dominant share in India's oil and gas exploration. The company depends to a large extent on which way crude oil prices move. However, we are unlikely to see crude oil prices drop, which should sustain profitability in the long run.
The company's stock is trading at a price to earnings ratio of just 6 times one year forward earnings and is available at a price to book of just 0.70 times, which makes it extremely attractive at these levels. A good stock to buy.
Coal India is a cash rich debt free company. The stock is currently available at a dividend yield of near 7 per cent. Again, a virtual monopoly business, which barely has any competition. India is a net importer of coal and coal demand is likely to remain robust.
The stock is available at a p/e under 10 times. Buy this stock for regular dividends. In fact, for 2029-20, the government may push many government owned companies to declare higher dividends, which is likely to benefit investors we well.
For those looking to invest in government owned companies all of these could offer good value.