Crude and Coronavirus have proved deadly for the stock markets. The Sensex had shed almost 18 percent from peak levels. Even the most astute investor did not see the rout coming. In fact, nobody can predict the bottom and the best thing to do is do an analysis and pick stocks that are at rock bottom. Here are three stocks that are unlikely to be impacted by either coronavirus or crude movement and are good buys at the current levels.
1. LIC Housing Finance
This is one of the top players in the housing finance sector. The stock has halved from its 52-week high price of Rs 586 and is available at just Rs 284. The shares are trading way below their 50, 100 and 200 day moving average.
The stock is available even below its book value of Rs 322 and the dividend yield is near 3 per cent. The shares are trading at a price to earnings level under 6, which is exceedingly low. The one reason the stock has been beaten down is the poor sentiment, which has led to hammering of every single stock.
The other reason for a fall in the stock price is roumours going around that LIC would merge the housing finance business with IDBI Bank, which has been flatly denied by LIC.
Fundamentally, there is nothing wrong with the stock and it has always been a stock that has been well rated and has good institutional holding. Should the market recover, we might see good buying in the shares of LIC Housing.
2. Coal India
Coal India is another stock that should not be impacted by either the coronavirus or the crash in crude prices. The company is a cash rich company with no debt on its books. The board of directors are slated to meet on March 12 to consider dividends. Even if the board of directors declares a dividend of Rs 12 per share, the dividend yield itself translates to 8 per cent at the current market price. The Rs 12 is just a guess and investors should wait for March 12.
The share have plunged to a new 52-week low of Rs 157.70 and the downside risk from here is low, given the solid dividend yield. Dividend this year until March 31, 2020 is tax free in the hands of investors, while next year dividends would be taxed in the hands of individuals.
Most analysts expect coal production at the company to continue to grow by 5 per cent each year, in terms of volumes. There are very limited risks in the business and the shares are attractively priced.
3. Indian Oil
This company is likely to be a big beneficiary of a collapse in crude prices. In fact, margins for the next few quarters are slated to improve considerably for the company. Indian Oil is the largest refiner and oil marketing company in India. It refines crude oil, which is imported, and with crude prices now nearing just $35 to $40 the company is likely to benefit in the next few quarters. However, immediately there maybe some concern of inventory losses, but, that is more of a short term loss.
The board of directors of the company are slated to meet on March 13 to declare interim dividend, so if you buy now, you are also entitled to dividends. The shares are trading at a p/e of just 7 times one year forward earnings and are also available at 0.86 times book value.
With decent dividend yields and subdued prices of crude oil for long, the stock of Indian Oil looks attractive. The shares are also available at a new 52-week low of around Rs 99.70.
Disclaimer: 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.
About the author: Sunil Fernandes is the Managing Editor of GoodReturns.in with 25-years of experience. Prior to this, he has worked with frontline newspapers and magazines including Dalal Street Investment Journal, Deccan Herald, Hindustan Times, Oman Economic Review and Gulf Times.