Even as the Indian benchmark indices in the recent past have recorded fresh highs amid all the domestic and global headwinds including the recent corona virus threat that yet again spooked concerns around global economic growth, experts suggest that the rally is not broad-based and is driven by few of the select stocks.
So, at this point, the best strategy would be to look out for stocks that reduce your losses while maximizing gains. For a short term of say 1 year investment horizon, experts suggest these stocks that can produce up to 48% return for you:
1. Dixon Technologies:
It is one Indian listed company from the electronic equipment category i.e. said to benefit from coronavirus outbreak in China, resulting in fall in Chinese imports and hence less of competition.
Positives of the company:
1. ‘Make in India' ambition of the government is a major driver of the company's phenomenal performance.
2. Also, as cost of production is trending higher in China, companies are shifting their base to India. This is another move which is benefitting the company.
3. Cut in corporate tax rate and hence improved profits
4. Strong order book for FY20-21.
5. Consolidated profit after tax jumped 51% y-o-y
Anand Rathi for the stock places a target price at Rs. 5899 with an upside of 31.5%. The company says incremental orders from clients including Samsung, Havells, Reliance Jio, Voltas Beko would be looked out for in the upcoming quarters.
For the conglomerate firm with business in the eyewear, jewellery, watches, perfume segment, brokerages see an upside of 18% with a target price of Rs.1528 per share. On February 17, 2020, the stock closed at Rs. 1316.05 per share on the NSE.
Rakesh Jhunjhunwala, his wife Rekha Jhunjhunwala, India's largest public insurer LIC are some of the key stockholders in the stock.
For the third quarter of FY20, the company reported better than expected sales in the jewellery segment which it primarily owes to wedding season demand. At the same time, the company said that sales in the eyewear and watches segment were not coming through. For the Q4FY20 period, the company is eyeing revenue growth in the range of 11-13%.
3. Coal India:
Brokerage firm Motilal Oswal sees an upside of 48% in the stock with a target price of Rs. 258 in one-year. The stock last closed at Rs. 167.85 on the BSE. While there have been raised concerns around thermal coal being able to show sustenance in India, the brokerage firm opines that still coal would be the biggest resource facilitating power generation in the country.
Positives for the stock: The company realized 95% of its exploration target till December. As per the company, drilling target was at 14 lakh meters of which the company had to drill 5.05 lakh meters and the remaining was to be outsourced. So, against the target of 9.32 lakh meter, the company finished drilling of 8.9 lakh meter up to December 2019, which is 95% of the target.
Also, the daily production capacity of the company is set to increase to 3 million tonnes (MT) next month which is sufficient to operate a 660-MW power plant for a year's time as the state-run mining company is targeting project expansion as well as increase in production.
Also, given the company's volume growth and continuing efficiency measures, the company despite a high base of FY19 will be able to drive 3% adjusted EBITDA CAGR over FY19-22. Volume is also expected to continue increasing for the firm at 5% over a medium term period.