The index has been hitting the roof as mutual funds flush with high amount of liquidity continue to drive stock prices higher. In the meantime it is difficult to find attractive valuations and we have picked a couple of stocks that could be bluechip stocks for long term investment. This is even as the Nifty has hit a new record of 10,000 points.
This is one stock that still looks reasonable for a number of reasons. Let us examine some of the reasons. The first is that zinc prices the world over may continue to be higher due to supply constraints and it would not be a surprise to see prices on the London Metal Exchange at close to $3200 per tonne. The company has some ambitious expansion plans going ahead including the silver refinery expansion. Production is also expected to be higher due to the Rampur Agucha mine ramps up.
Falling stock price
Hindustan Zinc has also managed to pay some loans which is good for the company. Zinc and silver production in the next couple of years is expected to be significantly higher while costs are likely to reduce due to value addition and hoisting of products through shaft in place of trucks. The stock of Hindustan Zinc has seen some mild reaction and is available at a price of just Rs 278. The dividend yield is also expected to be around 3-4 per cent in the coming years, which makes the stock a good bet at the current levels. Check stock quote of Hindustan Zinc
Hindustan Zinc in all probability could report an EPS of Rs 18 for 2017-18. This could leave the company with a p/e of around 15 times one year forward earnings at the current market price of Rs 278. A good stock to buy at the current levels considering the future earnings potential and also the current valuations.
This is another stock that has crashed from levels of Rs 1,800 to Rs 1,158 as the US FDA issued Form 483 with three observations to its Goa plant. While the observations could be quickly remedied, as is always, there is a sharp and swift reaction to prices and this is what has happened to the share price. However, at the current market price, Lupin remains at a p/e of just about 14 times one year forward earnings. However, what we suggest that you should look at buying Lupin shares only if there is a further erosion in the share price to around Rs 1,100 levels. The recent acquisition of Gavis in the US opens a big market for the company there. The US market would drive growth for the company there. Now, though the form 483 worries still stand for the Goa Plant the company recently got a pre -approval for the Goa manufacturing facility inspection (PAI) conducted by the US Food and Drug Administration (FDA) between 17 July and 21 July.
Predicting EPS estimates is always a big challenge, however, we believe that the company could report an EPS of Rs 80 by 2019. This means if you get the stock around Rs 1,158, you are getting the same at a p/e of less than times. There are risks associated with EPS predictions, especially a sharp slowdown in the Indian pharma market where Lupin has a solid market share. In any case, this stock maybe a good long term bet at the current market price, considering that it has fallen to a new 52-week low.
What are bluechip stocks?
The basic definition of blue chip stock may be different from investor to investor. There is no formal definition of a blue chip stock. Blue chip stocks have a long, stable history of excellence & they rated as relatively low-risk investments. A blue-chip stock is a stock of an established company that has a proven track record, strong balance sheet with a reduced debt burden, compatible earnings and huge market capitalization. In addition to this Blue-Chip stocks are less volatile, most stable & often the most reputable companies in existence. There are some blue chips stocks are Reliance Industries, ICICI Bank, ITC, TCS, Infy, etc. Blue Chips follow the index such as Sensex and Nifty very closely. These stocks have high liquidity, i.e., a large number of buyers and sellers are available.
Best small cap stocks to buy
While we have suggested a few bluechip stocks from the largercap space, in the link below link we have suggested some small cap stocks that could interest you. Please click on the link to read further
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