Before we begin recommending the stocks, we wish to state that the stocks that are being recommended are high risk ones, which have the potential to generate returns, should there be a better financial performance. These stocks have largely been hammered down in the past, but, do have the potential to bounce back. They can also hit you hard and you can lose money, should things not work.
Shares in Just Dial have been hammered down from 52-week high prices of Rs 973 to the current levels of Rs 524, as the company has had a few dismal quarters of performance. The company reported a net profit of Rs 27.44 crores for the quarter ending December 31, 2016. The worry right now is that growth at the company has tapered. However, demonetization did not have too much of an impact on the company. According to the management, the focus would now be on the company's core business, which should be able to generate decent growth.
Still looks overvalued, but has the potential to outperform
Just Dial has the potential to beat returns from the indices quite easily, given that it has been very volatile in the past. However, the valuations are still not attractive, but the company tends to receive heavy valuations, given the nature of its niche business. The company can report an EPS of Rs 20 for 2017-18, which should make the stock still expensive at the current levels with a discounting as high as 25 times. However, if there is a sharp turnaround in operations, expect the stock to yield good returns. Check stock quote of Just Dial here
This is another stock that can be all over the place, but, has the potential to bounce back as shown in the past. The stock has hit a 52-week high of Rs 1,129 and has lost nearly 50 per cent in value since then and is currently trading at Rs 718. Recently, the US FDA issued a warning letter to the company's Morton Grove manufacturing plant in the US. Three of its Indian plants are already under a USFDA-imposed import ban. This has largely impacted the US business badly.
Fundamentals of Wockhardt
The company reported a loss of Rs 54 crores for the quarter ending December 31, 2016. However, the results have been all over the place in the past, with the company capable of swinging back into profits. For that to happen the domestic business must bounce back and the company should resolve issues pertaining to the US FDA. This is one stock that is highly volatile, but has the capability to swing back. If you have a penchant for risk go for this stock. It is a make or break stock at the current prices. Check stock quote of Wockhardt here
This shares are almost similar to Wockhardt in the sense it tends to fall on US FDA worries. The shares have fallen from Rs 1045 to the current levels of Rs 749 currently. The stock in the month of December fell after the US FDA made some very critical observations on its facility in Vishakhapatnam. The five observations that the US FDA found were lack of proper controls over computer systems to ensure drug quality, improper maintenance of facility and equipment, etc. This can result in import alert from the US FDA, which could hit revenues. Now, this remains a high risk, high returns bet simply because if the company resolves the US FDA concerns, it could be back on track. If not, the stock could plunge further.
Fundamentals of Divis Labs
Divis Labs is very different from Wockhardt in the sense it is very difficult to think of the company making losses. There is no way that could happen. In fact, the company reported an EPS of Rs 10.11 for the quarter ending Dec 31, 2016. Even if the company does an EPS of Rs 40 next year, the stock should trade at least at Rs 1,000 considering a 25 p/e multiple. A greatly undervalued stock at the current levels. Again, a high risk, high returns bet.
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.