It most certainly is the right time to buy small and midcap stocks and here are some good reason. The biggest of this is the dividend yields for some of them have turned extremely attractive, which we wil discuss later in this article.
Price destruction in small and midcap
The biggest reason to buy small and midcap stocks is the price destruction we have seen in come of these stocks. Most of the good quality stocks, which have been declaring dividends for many years are available at 52-week lows. Some of them have remained profitable for many years now. Most of these stocks are now available at half of their 52-week low price.
Some quality small and midcap stocks to buy
Karnataka Bank with a price to book of less than 0.50 times, is available with a dividend yield of near 4.5 per cent, based on dividend for last year. Similarly, Jagran Prakashan another small cap stock, is available at a dividend yield of 5.2 per cent, based on last year's dividends. Again, this company is a leader in its field and publishes India's largest read newspaper "Dainik Jagran". DB Corp, another leader in its field is available at a dividend yield of near 6 per cent. Jubilant Lifesciences is another attractive midcap stock that is trading at a p/e of less than 10 times one year foward earnings. Sun TV a debt free company is another one that offers a dividend yield of near 3 per cent and is at attractive valuations.
All of these compainies have a good track of profitability and dividend for many years now. Price to earnings multiples in most cases is in single digits.
May not get stocks at these prices again
Several stocks today are available at very decent price to earnings multiple, which one may not get in the next few quarters from now. It is alost certain that the markets would recover from these levels. Will it get worse, before things get better is hard to say. However, investors with a long term investing time frame, may real rich rewards buying at these levels.