Top 5 cheap stocks to accumulate today

Not many stocks look cheap to buy when market is trading at all-time high. We follow Nifty 500 stocks very closely and out of those 500 stocks there are almost 74 stocks which are trading within our 2018 valuation zone.

Out of those 74 stocks we picked up top 5 stocks and thought to share with you. They are as follows:

  1. Castrol India
  2. Balrampur Chini
  3. Power Finance Company
  4. Aurobindo Pharma
  5. Tech Mahindra

It is important to understand here that these are not our recommendation to buy. This is just a list of companies for you to start your research and see if any of these companies are suitable for your portfolio. A quick disclosure over here is that we own Tech Mahindra stocks in our portfolio.

Castrol India

Castrol India is oil lubricant company and we use to own its shares last year in our portfolio activities. We have shared our views on this blog about it many times last year. Apart from valuations we look at the earnings growth of the company. If earnings are not growing at healthy rates then there is a good chance its intrinsic values too don’t grow. Like last year, we thought to let go the idea of investing with Castrol India as there are better opportunities available to invest with.

Balrampur Chini

Balrampur Chini is commodity stock and is cyclical in nature. They posted profits of Rs 593 crore for the 2017 financial year. Analysts who follow this business are expecting Balrampur Chini can repeat the similar performance in 2018 too. The bull side are expecting its profits for 2018 around Rs 550 crore and the bear side analysts are expecting its profits around Rs 435 crore.

Today it is almost trading twice to its book value. But similar economics of business easily trade in range of 4 – 6 times book value. There are other parameters too investors look at, like stability in its earnings growth and how leveraged the company is and how capable are the managers of business are to allocate shareholders capital prudently.

We don’t like this stock is because we don’t see stability in its earnings and also scalability of its earnings.

Power Finance Company

PFC was in the news last week for its NPA’s and its 2017 financial results. PFC has been reporting healthy profits but on the other side the NPA’s have also risen four folds. It is trading around three quarters of its book value.

Businesses of such economies trade around twice its book value. But the NPA’s and business environment is not helping its share price to run up those levels. But if you think they will be out of the NPA woods in 4 – 6 quarters than maybe this is the best time to buy its stock.

Aurobindo Pharma

We did covered this stock in detail when its stock price surged 13% after its quarterly and yearly results. You can read all about it over here.

Tech Mahindra

The stock price tumbled below Rs 400 last week and it was music to our ears. If the bear analysts are correct with their analysis then we will be not surprised to see its stock price falling below Rs 300 per share this financial year. As they expect them to report profits of Rs 2,300 crore for 2018. They reported profits for the 2017 full financial year of Rs 2,934 crore. The bull side or optimist analysts expect them to report profits of Rs 4,800 crore.

The market price today is pointing its profits around Rs 3,450 crore for 2018. If they beat those market expectations in their first or second quarter, you will find its stock price climbing close to Rs 500 per share.

What do you think?

We covered this stock too on our blog earlier, you can click here to read our previous post on Tech Mahindra.

Conclusion

As mentioned earlier, this is not our recommendation but a guide to all the investors who are confuse where to look for investments in the stock market today. This post should be considered as resource to start your research and then take your own investment decision.

From the above list of 5 stocks we own Tech Mahindra in our portfolio.