Even as the Sensex has surged past the 61,000 points mark again, there are a few good quality stocks that have dropped to near 52-week lows, if not 52-week lows. Let's take a look at some of these stocks and if you should buy the same.
List of stocks dropped to near 52-week lows
|Name||52-week low price||Current market price|
|HDFC Life||Rs 627||Rs 670|
|Castrol India||Rs 117||Rs 124|
|Colgate Palmolive||Rs 1392||Rs 1450|
|SBI Cards||Rs 860||Rs 895|
|Jubilant Life||Rs 557||Rs 569|
|P&G Health||Rs 4903||Rs 5145|
|Gillette India||Rs 5250||Rs 5202|
Should you buy these beaten down shares?
To begin with the list will show a lot of names from the FMCG and the pharma space. In fact, even stocks like Hindustan Unilever are not very far away from 52-week lows. The FMCG sector especially players like HUL and Colgate have been hit hard by rising input costs. Unlike autos where one can easily pass on the rise in raw material costs to consumers, it's hard to suddenly raise prices for FMCG players as rural demand could be impacted.
For decades we had seen multinational FMCG companies seeing heavy valuations and things seen to be turning now. Stocks like SBI cards are unlikely to do amazingly well in the coming days, given that the payments mechanism has evolved and it's become a fiercely competitive market with the UPI payment systems on.
These stocks good be a good bet for their dividends
Shares of Castrol India and Gillette India could be good bets for stock pickers. Both are virtually debt free companies with a decent track record of paying dividends. In fact, for Castrol India the dividend works to as high as 4.4%, which is not bad for a multinational company. With a price to earnings of less than 20 times, the stock is not a bad bet.
As far as the other stocks are concerned, we would advise caution especially on stocks like SBI Cards. Being nearer to 52-week lows, does not always make the share price attractive. So, invest with caution.
Greynium Information Technologies and the author are not liable for any losses caused as a result of decisions based on the article. Investing in equities is risky. The author and his family do now own any shares mentioned above.