Indian Markets have rallied a great deal and it is time to pick stocks that can create value. Here are a list of stocks that have great value from a long term perspective.
Bank of Baroda
Not many investors are looking to buy into government banking stocks at the moment. But, these could be good contrarian bets at the moment. The government is looking at the possibility of issuing capital bonds for these PSU Banks, to boost their capital. Government banks are in desperate need of capital to expand and also to meet Basel III requirements. Apart from this the belief is that non performing assets for some of these banks may have peaked. Bank of Baroda is among the top three government owned banks with a sizeable presence across the country. It maybe one of the best government owned banks and a great contrarian stock to buy at the current levels. The stock is also trading at 0.87 times book value.
Shares in Coal India have fallen from levels of Rs 340 to the current levels of Rs 257. This is a good stock to buy for a number of reasons. The first is that Coal production at the company is higher and was much better in the month of August. The dividend yield on the stock would be around 7 to 8 per cent and the company declares dividends in the month of Feb. Cash rich business, that is also debt free are other positives. Check stock quote of Coal India here
We think that Union Bank has value because of a number of reasons. Today, it is impossible to create a franchisee as large as Union Bank for a new full-fledged bank. The stock is trading below its book value and there is a high possibility that in the next one year or so, NPAs would start falling as growth in the economy picks-up. PSU banking stocks which are saddled with NPAs would be one of the biggest beneficiaries of such a growth. However, in the immediate short term all would depend on how growth pans out. From a 2-3 year perspective this stock should not be a bad bet. Check stock quote of Union Bank here
Tata Motors DVR
The Tata Motors DVR is trading much lower at Rs 219 compared to the stock price of Rs 288. The only difference between a DVR and a share is that DVRs have lesser voting rights. But, many investors are least interested and hardly attend AGMs. Tata Motors DVR also entitles you to an extra dividend of 5 per cent when compared to equity shares. So, if you want to look at purchasing the Tata Motors stock go for the DVR. The shares of the company have fallen a great deal recently due to a poor set of results. However, we believe that a spate of new launches from Jaguar Landrover and robust growth in the US Economy would power the shares ahead. Buy with a long term perspective in mind.
Karnataka Bank is another stock that we like at the current levels. It is amongst the cheapest private sector banking stocks that is presently available. If you have a long term perspective n mind, this is a value stock that you should pick. The p/e ratio for the stock is around 10 times, while the p/e book 0.91, which is much better than larger and smaller private sector banks in the country. With a dividend yield of 2.5 per cent, the stock is not a bad bet at the current levels. Check stock quote of Karnataka Bank here
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