Investing successfully is not easy. It requires incredible discipline and patience with all the other qualities. After all, the greatest rewards come when you buy stocks at your price and wait for that right opportunity with huge upside and then swing big. This approach was introduced by Warren Buffett and we at Valueoperations practice that loyally.

Buffett in the past has said: “I always tell students in business school they’d be better off when they got out of business school to have a punch card with 20 punches on it. And every time they made an investment decision, they used up one of their punches, because they aren’t going to get 20 great ideas in their lifetime. They’re going to get five or three or seven, and you can get rich off five or three or seven. But what you can’t get rich doing is trying to get one every day.”

Many investment managers, financial planners and investors who shadow Buffett take 20 great ideas plainly. As a professional investors, what conditions we are in today, by average we identify 4 – 6 new ideas if we are lucky in a year’s time. The punch card approach acknowledges that there is an opportunity cost of capital, and that capital should only be employed when an attractive investment is found. The above quote to us is the reminder that activity is not what rewarded in investing. It is waiting for the right opportunity and acting boldly when those opportunities present themselves. When there are few great opportunities, the optimal decision is to hold cash in your portfolio.

Sometimes we find new ideas but they might be less attractive than the positions that are already in our portfolio. If this is the case we pass and continue our search.

Buffett is an incredible investor but it makes little sense to try and replicate his approach verbatim. Like him, we also believe in concentrated portfolio and to swing big only when opportunity is present. Buffett himself is an amalgamation of different investment styles, most notably following the tenets of Ben Graham and Phil Fisher. It is better to take ideas from different investors whose philosophies resonate with you, and create your own investment style that best suits your personality and goals.

We created our own style and I have shared with you about it on this blog. The 10 investment ideas list is built by selecting best earnings growth opportunity available in the market and the one who are trading close or inside our valuation spectrum. This means not all these 10 ideas are trading at cheap price and you still need to do research on its competitive edge and future prospects of the company. We believe in evidence based research. So before plunging your cash in these ideas, find the evidence of its future prospects.

The list of 10 companies on the basis of 2018 earnings growth and valuation spectrum are as follows:

jk bank logo
eros
Axis bank logo
yes bank logo
shree cement logo
mindtree
ipca logo
kitex garment logo
indiabulls
alembic

 

As mentioned earlier, not all of these stocks are trading within their 2018 intrinsic value spectrum. Below is the list of stocks which are trading in their 2018 spectrum:

Jk Bank
Eros International
Axis Bank
Mindtree
Kitex Garment
Indiabulls Housing Finance

 

Aziz Dodhiya is the chief investment officer for the Valueoperations funds which operates in the Indian market as an FPI (Foreign Portfolio Investor). We do not offer any personal advice to buy or sell any stocks and the views that are shared by Aziz might not incline to your personal investment strategy and this is the reason we advise you to take professional advice before going ahead with our views.