Lower share prices, need not necessarily be the best and investors should know, that there are risks. Having said that, there are also stocks that can give good returns over the more long term. We warn investors, that these are high risk stocks, and invest in them, if you have an appetite for risk. Here are some of the best stocks under Rs 50, which we believe have the potential to make money in the coming days.
Jammu & Kashmir Bank
J&K Bank, is majority owned by the government of J&K. However, it is often treated as more of a private sector player.
The bank, particularly in 2016-17 was struggling and had a huge loss of 1,632 crores, during that period. However, we are increasingly noticing that the bank is returning to profitability and the non performing assets are beginning to show a declining trend.
For the half-year ending Sept 30, 2018, net profits of the J&K Bank jumped a whopping 44 per cent to Rs 146.34 crores for the half year ended 30th September 2018.
The Bank had posted a net profit of Rs 101 crores during the first half of previous fiscal. As we said earlier, the bank is showing a more stable performance and has now reported 6 consecutive quarters of profitability.
J&K Bank: Cheap on valuations
The management of the bank is laying an emphasis on recoveries and also on the retail sector. This is already bearing fruit. The gross non performing assets for the quarter ending Sept 30, 2018 was 9 per cent, as against 9.83 per cent for the period ending June 30, 2018.
Among the few reasons to recommend the stock are cheap valuations and a sharp fall in the share price.
The shares of J&K Bank have dropped from 52-week high levels of Rs 90 to Rs 42. Going forward in 2018-19, the bank should report an EPS of Rs 7. The stock is barely quoting at a p/e of 6 times, one year forward earnings. Also, the price to book value is just 0.44 times. A good cheap shares to own from a 2-3 year perspective.
South Indian Bank
If you are looking to invest in banking stocks, that have the potential to generate returns in the long term, South Indian Bank should be a good bet. The bank is likely to focus on retail lending and has been gradually improving performance in this area. The CASA growth and control of non performing assets at the bank has also been pretty decent.
For the quarter ending Sept 30, 2018, the bank did surprise with a decent performance. Net profits surged to Rs 70 crores from Rs 23 crores in the previous quarter ending June 30, 2018.
South Indian Bank can report an EPS of close to Rs 1.5 for FY 2018-19. The stock is trading at a p/e of just 9 times one year forward earnings. This is a private sector bank that definitely deserves better discounting. This makes the stock a good bet at the current level. Buy for long term capital gains.
Exercise some caution
It is best to exercise some degree of caution, as the stocks recommended may or may not be fundamentally the best. Stocks under Rs 50 are generally small cap stocks, whose price can be extremely volatile. In some case the downside risk is very low, given the huge destruction already in the stock. Remember, if you hold for a longer period of time, there maybe some possibility of making money. We have also recommended some small cap stocks here
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 own some of the shares mentioned above, at the time of writing this article.