Find out how 5 expected growth stocks flared in 2017

 

Flash back for the year and imagine we are looking stocks for the investments. You did a bit of research and found that investing in the growth stock is the way to make money. But what does growth stock look like?

When you hear on business channels investment gurus saying to invest in the growth stocks or read on a blog like this, they mean to invest in the companies who are growing their profits year after year.

But hang on a second. Why will value investor invest in the growth stock? Isn’t value investing is all about investing in the dud or cheap stock.

We claim we are the modern value investors who mix the value investing techniques on the growth stocks. It is not easy to find cheap growth stocks too often. But not impossible. The challenge is to be consistent and disciplined in your process.

You just need to keep the list of growth stocks updated and keep a track of its valuation band and pull the trigger whenever the opportunity is thrown on you. It is also important to know those companies before investing and build your conviction that they are good for investments. Don’t forget that when you buy any stocks you become co-owner of that business.

It is always good to test your process and find out does it works. So here is the list of top 5 growth stocks we were expecting at the start of last financial year.

1. Shree Cements

Shree cement ranked number one growth stock from list of 105 companies that I follow.

52 Week High 52 week low Expected low IV band (2017) Expected high IV band (2017)
Rs 19,998 Rs 12,200 Rs 1,933 Rs 13,826

 

We talked about our universe exactly a year back and shared this company name in our watchlist. So if you would have bought this stock at Rs 12,200 and sold at Rs 13,826 then you would have made 13.33% from your investment.

2. IPCA Lab

IPCA lab ranked number 2 and was expected to come back from its 2016 lows.

52 Week High 52 week low Expected low IV band (2017) Expected high IV band (2017)
Rs 656 Rs 402 Rs 79 Rs 336

 

As mentioned earlier, growth stocks are very hard to get at cheap price and especially if company belongs to Pharma sector. Always remember it is very hard to hit every ball for run. You sometimes have to let it go. There is always an opportunity available to invest in the stock market. It is important to know your circle of competence. My circle of competence is mine 105 companies.

We have written about IPCA lab on our blog post regularly and shared our views.

3. ONGC

We have written a lot on ONGC in our past 5 years blog post.

52 Week High 52 week low Expected low IV band (2017) Expected high IV band (2017)
Rs 315 Rs 179 Rs 111 Rs 151

 

You might have missed to invest in this stock last financial year. But the good news is they are trading within the 2018 intrinsic value band and we have added few stocks of ONGC in our 2018 portfolio model.

4. Axis Bank

This has been the darling investment for us in 2016. We also expect Axis Bank to come back with bang. The only issue is it is expensive to buy today but good to sell.

52 Week High 52 week low Expected low IV band (2017) Expected high IV band (2017)
Rs 638 Rs 425 Rs 216 Rs 417

 

You can read our blog post on Axis bank here.

5. Emami Ltd

We haven’t written a lot about Emami Ltd as we have always found this stock expensive. But we have talked about it and mentioned name of Emami Ltd in our past blog post.

52 Week High 52 week low Expected low IV band (2017) Expected high IV band (2017)
Rs 1,261 Rs 937 Rs 181 Rs 901

 

You would have missed investing in this too by looking at 2017 intrinsic value band.

Conclusion

We have seen 2016 financial year very hard to allocate our cash reserves by just looking at only one year forward valuation band. It is important to remember that stock market is forward looking tool. So when we see Axis Bank is trading at Rs 500 today, does not mean this business fair value for 2017 financial year is Rs 500 today!

Investors invest looking at the future cash flow that business will generate and pay today if the price is trading below their valuation. So how far should you look and invest? Professional investors, brokerage houses and analysts invest looking 2 year forward valuation band. We also do the same. But we are very strict in selling them when they hit higher band of second year valuation zone.

If we look at 2 year forward valuation band then 3 out of 5 stocks would have qualified for investments in 2016.