If you are new to investing you do not want to begin the investing journey with high risk high beta stocks, that can result in losses. There have been many beginners to stock investing in India, who have invested money and never recovered that money. Once the disappointment sets in, you do not want to ever invest again. So, a good idea would be to stay focussed on quality stocks, which are not very high beta and have sound fundamentals. Here are a few stocks that we have picked.
Bank of Baroda
After the euphoria surrounding bank recapitalization, shares of Bank of Baroda rallied to as much as Rs 206, but, has now dipped 25 per cent all over again to Rs 149.
There are a number of reasons that beginners to investing can buy the stock of Bank of Baroda. If you take a look at the numbers for the quarter ending Sept 30, 2017, we see a good improvement. Slippages have already been showing a decline and that is expected to further improve.
In fact, with the worst of slippages now being, the bank could see net NPAs reduce to 3.3 per cent by FY 2019. The loan book which grew by 14 per cent for the quarter ending Sept 30, 2017, is expected to rise even further.
Bank of Baroda: A good Long term bet
Led by recovery in slippages and NPAs, profits at the bank are expected to grow by at least 50 per cent in the next few years.
By FY 2019, the bank can report an EPS of Rs 16. If we discount the same by 15 times, there is no reason why the stock should not trade at Rs 240 in the next couple of years. A good stock to buy from a long term point of view.
Hindustan Media Ventures Ltd
Hindustan Media Ventures (HMVL) publishes"Hindustan", the third largest read Hindi newspaper in the country.
The company did not report a good set of quarterly numbers for the period ending Sept 30, 2017, which is why the stock dipped to a 52-week low of Rs 229. However, beginners to investing in shares would do well to buy the shares as the risks look minimal at the current prices and let us see why.
HMVL was largely impacted in the last quarter because of RERA and GST, which saw advertising revenue being hurt. However, the management remains confident that the second half of the year would see a smart recovery.
Hindustan Media: Huge potential
"Hindustan" newspaper is the number one circulated newspaper in Bihar and Jharkhand. The company is now looking to expand gradually into key markets and its cash flows can allow it do so.
Though advertising revenues for the quarter ending Sept 30, 2017 declined, the company managed to maintain its market share and also improved yields. Going ahead the company is looking at persistent investment in copies in its core markets.
It is also aiming at better monetization of copies through better yield. It is likely that along with advertisement recovery, we would see better performance of the company in the coming quarters.
Hindustan Media: Cheap on valuations
Hindustan Media Ventures is one of the cheapest available media stocks at the moment.
For example, the stock is trading at a p/e of under 10 times one year forward earnings of Rs 24. In fact, the price to book value on trailing basis is just 1.5 times.
The company has had a bad quarter, though we expect things to turn this quarter with advert spendings increasing due to the festive season.
In about 18 months from now, there would be the national elections and we would see HMVL benefiting from huge advert spends.
The stock is undervalued at the current levels and investors would do well to buy the stock on declines. A price of Rs 300 on the stock is not far fetched at all.
How shares are taxed?
Beginners to investing in shares should now understand the tax implications especially after the Union Budget.
There is a long term capital gains on tax that is applicable if you now sell shares after 1 year. The Union Budget 2018 as once again introduced this tax. Now, if you make a profit of more than Rs 1 lakh, you need to pay 10 per cent as capital gains tax. Short term capital gains tax on shares would continue to stay at levels of 15 per cent.
Beginners to investing should note these changes before investing.
Coal India is a good stock for those looking at limited downside risk from the markets.
The stock is one of the best stocks for an attractive dividend yield. Tax free dividend of up to 6 per cent at the current market price of Rs 265, makes the stock a good pick.
Apart from this the company is a cash rich and has no debt on its books. It faces very limited competition and coal prices are unlikely to fall anytime soon. A good pick at the current levels.
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 do not own any shares in the above mentioned stocks.