Midcap stocks have had a stellar rally with the Midcap index itself hitting a new lifetime high. The buying frenzy in midcaps continues as investors chase returns. We wish to tell readers, that we are recommending only a strong set of stocks that have the potential to gain and our undervalued on various parameters.
What are we looking at when recommending these stocks?
There are various parameters that we look at when we are recommending a stock. Among these include the price to earnings multiple factor, as well as other factors like price to book. Some important indicators that investors may also consider is the amount of pledged shares of the promoters. This has all together been ignored by analysts these days. In any case, here are a few midcap stocks that we are recommending to investors.
There are a number of reasons to place a "buy" call on CESC. The company is an electricity generation company and the sole electricity distribution company serving 567 square kilometres of area under the Kolkata municipal corporation. This makes the business of the company a monopoly and the company has run the business most efficiently all these years. The company is a part of the Sanjeev Goenka, and was earlier part of the RPG group. CESC owns and operates thermal as well as a gas turbine plant and also distributes power in the city of Kolkata.
Valuations of CESC
The reasons to recommend buying the stock of CESC is plenty. Firstly, the company's business is a monopoly business. The second is the valuations are not very expensive.
For the quarter ending June 30, 2016, CESC reported a decent net profit and the EPS was placed at Rs 13.52. The company has the potential to report an EPS of Rs 60 for the full year 2016-17. This makes for a p/e of under 10 times, at the current market price of Rs 597.
Also, the stock would trade at below book value by next year. Considering the strong pedigree, nature of business and valuations, the stock is one of the best midcap stocks pick at the current price of Rs 597. Go for it, if you have a long term perspective in mind.
Great Eastern Shipping
Great Eastern Shipping, also called GE Shipping is a very old listed company in India. The company is the largest private shipping company in the country. Great Eastern Shipping company operates under two two main businesses: The first of course is shipping and the second is offshore. The shipping business is involved in transportation of crude oil, petroleum products, gas and dry bulk commodities. The offshore business serves the the oil companies in carrying out offshore exploration and production activities, through its subsidiary Greatship (India) Limited. We keep seeing the company adding to its fleet size very regularly.
Fundamentals of Great Eastern Shipping
Fundamentally, this has to be a very undervalued stock. The company reported an EPS of almost Rs 7 for the quarter ending June 30, 2016. We believe the company can report an EPS of at least 30 for 2016-16. This means, the stock has a price to earnings multiple of just 10 times, and is pretty much undervalued. Now, that is not all. The price to book value of the stock is 0.68 times. This means you are getting the stock below book value. Another important aspect is that the company declares a dividend of 135 per cent. On the current market price of Rs 373, you get a dividend yield of 3.62. This is not bad at all, considering that dividend is tax free in the hands of investors. This stock looks a good bet at the current price and one of the top midcap stock to buy.
Gujarat Mineral Development Corporation
The stock of GMDC is trading below book value. The company gives you a dividend of 150 per cent, which takes your dividend yield itself to almost 3 per cent. The company reported a superb performance for the quarter ending June 30, 2016, after which the stock has been on a roll. GMDC reported an EPS of Rs 3.61 for the quarter ending June 30, 2016. Even if you assume the company can repeat the feat, it can achieve an EPS of Rs 14 at the very least for 2016-17. This makes the stock p/e at around 8 times, 1-year forward earnings. Not a bad bet at the current levels.
Gujarat Mineral Development Corporation
Gujarat Mineral Development Corporation (GMDC) has been an undervalued stock for sometime now. This is one reason why in a falling market, the stock recently hit a 52-week high of Rs 102.
This stock is an undervalued midcap stock that has the potential to rally. In fact, it should be among the top midcap stocks to buy. Gujarat Mineral is engaged in the mining of a host of minerals including buaxite and lignite, apart from wind power and solar power. The businesses are good cash rich businesses with a robust cash flow.
Why you should buy the shares of GMDC?
The stock of GMDC is trading below book value. The company gives you a dividend of 150 per cent, which takes your dividend yield itself to almost 3 per cent. The company reported a superb performance for the quarter ending June 30, 2016, after which the stock has been on a roll. GMDC reported an EPS of Rs 3.61 for the said period. Even if you assume the company can repeat the feat, it can achieve and EPS of Rs 14 at the very least for 2016-17. This makes the stock p/e at around 8 times, 1-year forward earnings. Not a bad bet at the current levels and one of the best midcap stocks to buy. Check stock quote of GMDC here
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