7 Largecap Quality Stocks Near 52-week Lows Today, Are They Value Traps?

Stock markets have been all over the place, thanks to rising bond yields in the US, and tensions over the Russia-Ukraine border. Several high quality stocks are trading near 52-week lows. Here are a list of 7 largecap stocks that are trading near 52-week lows.

Few largecap stocks near 52 week lows

Stock	Current market price	52-week low
HDFC	2401	2364
MRF	65967	65007
Colgate Palmolive	1426	1375
ICICI Lombard	1290	1274
Paytm	890	864
Dr Reddy's	4315	4304
HUL	2284	2214

Should you buy HDFC, MRF and Colgate?

Out of the three, we believe that HDFC definitely holds value, given its huge stake in HDFC Bank, HDFC Ergo, HDFC Life, HDFC Mutual Fund etc.

The stock has fallen because FIIs have been selling the stock. It's mortgage business continues to do well and the company reported a compounded annual growth rates in net profits of 21% over the last 5-years.

The problem for Colgate and MRF is both cost pressures and as such we are neutral on these stocks. Input costs will continue to rise and for a company like Colgate, as its fierce competition out there. One cannot be sure of good returns on both MRF and the Colgate stock, though HDFC hold tremendous value.

Should you buy the stocks of ICICI Lombard, Paytm and HUL?

Out of the above Paytm is definitely not worth taking a risk on. It's one thing for venture capitalist to pick stakes and value companies at exorbitant rates, and another thing for a small investor to get his finger burned.

A small investor who received allotment in the shares of Paytm at Rs 2150 and is now holding the shares at a market price of Rs 890 is incurring massive losses. For a loss making company, we do not know whether it is sensible to pay even Rs 890. ICICI Lombard again is a stock that investors can avoid.

As far as HUL is concerned, the stupendous growth rates of the past are behind. The company like other FMCG players would have to battle rising costs. We believe that of all the stocks listed above HDFC is definitely a good buy, given that it owns high quality subsidiaries and the valuations runs into billions.

As for the others we would suggest not to buy the loss making ones for sure, while a few others like FMCG stocks may just about continue to chug along.

Limit your exposure

We believe that the returns from stocks that investors generated in the past, maybe hard to come by. With interest rates around the globe likely to rise, there is a high possibility that stocks could remain under pressure. Investors are there fore advised caution.

We suggest buying into only dividend paying companies and avoid buying stocks that are needlessly hyped.

Disclaimer

Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.