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.
Hindustan Media Ventures Ltd
Hindustan Media Ventures (HMVL) published "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.
Beginners to investing in shares need to stick to some very fundamentally sound stocks, with very little business risk. One such stock is Coal India.
The one reason why we are recommending the stock is because of its solid dividend yield. The shares are available at a dividend yield of almost 7 per cent, even if the company drops the dividend from Rs 21 per share to Rs 18 per share, which it declared last year.
This is higher than bank deposit interest rates. Coal India is a debt free dividend paying company, which operates in a very low risk environment. This makes the stock of the company worth picking at the current levels. Buy the stock if you are investing from a long term perspective.
How shares are taxed?
Whether you are a beginner or not, shares would be taxed, if you make a profit and sell the same before one year. However, if you sell the same after one year, there would be no capital gains tax that would be applicable. What this means is that you need to be careful, before you invest and consider all the tax aspects. This is especially true for a beginner to investing in stocks, who may not know the tax implications of the same. If you do not understand, it is best to consider an advisor, who would make you understand the liability arising on short and long term capital gains.
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.