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Which Stocks Delivered Highest Returns in 2015?
Dec 21, 2015


The calendar year 2015 has largely been a disappointing year for investors in the Indian stock markets. The benchmark BSE-Sensex is down about 6% this year. But this was not the trend across the board.

We came across some interesting statistics reported by The Hindu Business Line. As per the business daily, 10% of the stocks listed in the Bombay Stock Exchange delivered 100% or more returns between 31 December 2014 and 17 December 2015. 40% of the stocks delivered returns in excess of 20%. 50% of the stocks gained 10% or more.

It is noteworthy that about 95% of the stocks that delivered 100% or more returns belonged to the small cap space.

Today's chart of the day shows the top five gainers of the year - Mangalam Drugs & Organics Ltd, Uniply Industries Ltd, Cupid Ltd, Keerthi Industries Ltd and Himachal Fibres Ltd.

Had you invested Rs 1 lakh in each of these five small cap stocks, your total investment of Rs 5 lakh would have been worth a massive Rs 57 lakh! In other words, your investment would have multiplied 11 times in less than a year's time.

We talked earlier about the power of storytelling. Isn't the story that we just narrated a tempting one? Don't we all want to become rich, and fast?

Our experience in researching small cap stocks tells us that you could be in for big trouble if you just look at the rosy returns. When my team and I shortlist stocks for our Hidden Treasure small cap stock recommendation service, we do a thorough analysis of the company's business model, financial health, growth prospects, profitability management quality, and so on.

We just took a cursory glance at the financials of some of the small cap stocks that have delivered multi-fold returns in 2015. We noticed that some of these companies are loss-making...or have just turned profitable after some years of losses...or have very poor profitability.

While small cap stocks have been the biggest winners in 2015, they also lead the list of biggest losers. For instance, among the stocks that crashed 50% or more this year, nearly 97% belong to the small cap category.

So, the small cap space is a high-risk high-return zone and must be treaded cautiously.

We recommend you read this earlier 5Minute Wrapup edition titled The Art of Investing in Small Cap Stocks.

Data Source: Business Line;
*Returns between 31 Dec 2014 and 17 Dec 2015

This Chart Of The Day was published in The 5 Minute WrapUp - Beware of Stories That Could Trim Your Portfolios Returns

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