This is a Must-Have Stock for Your Portfolio - The 5 Minute WrapUp by Equitymaster
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This is a Must-Have Stock for Your Portfolio

Aug 8, 2018

Editor's note: Dear reader, your chance to claim Tanushree Banerjee's Permanent Wealth Blueprint, ends at 11:59 pm, tonight.

This is one of Tanushree's most ambitious projects.

The Permanent Wealth Blueprint also contains 3 stock recommendations that Tanushree believes, hold the potential to generate Permanent wealth.

Now, if you haven't claimed your copy of the Permanent Wealth Blueprint...click here.


Sarvajeet Bodas, Research analyst, The 5 Minute Wrapup

So far in 2018, the frontline indices - the BSE Sensex and the NSE Nifty have done well, touching all-time highs.

The Sensex crossed the 37,700-mark on Monday. That's an 11% increase in 2018. That too, after it rose 28% last year.

On the other hand, small-cap and mid-cap indices have fallen sharply this year.

I understand that the turmoil in midcaps and smallcaps could have badly hit your portfolio, dear reader.

In fact, over 300 stocks out of the BSE 500 index, are down in the range of 10% to 90%, especially those with issues in management quality, corporate governance, and business prospects. This sharp correction not only wiped out all the gains of 2017 but also investors' capital too.

Any portfolios with high weight to midcaps and smallcaps would have seen a sharp fall.

In times like this, I believe you need to have a portfolio with the best quality stocks.

Stocks which are safe. Stocks which offer steady growth. Stocks with a good runway of growth.

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Tanushree Banerjee, editor of StockSelect, worked hard for many months to put together just such a list of stocks for her Permanent Wealth Blueprint.

The aim of the blueprint is to generate permanent wealth. This blueprint includes Tanushree's first three 'permanent wealth stocks'.

You can access this blueprint and the 3 stocks here.

I thought of discussing one stock in particular.

I still remember... Girish and I had to wait for almost one year to get a meeting with the management. Finally, the management agreed to meet us in October last year.

Why did we chase the management for one year?

Because we like the business...a lot. Here's why.

  • It has a big entry barrier which keeps out competition.
  • The consumer demand for its product is stable.
  • It has decent pricing power.
  • It has a good opportunity to increase its market share.
  • It's an unstoppable free cash flow generating machine.
  • Superb financials (details in today's chart of the day).

Best of all...this company has a near monopoly in its areas of operations.

It has grown at 15% per year over the past decade.

It generates so much cash that it doesn't need any debt to fund its capital expenditure. Yes, it has zero debt on its books.

Last but not least, we like the management too because they are proactive and have well-defined plans for expansion.

The stock also gets one of the highest scores (7.9 out of 10) on the Equitymaster Risk Matrix (ERM®).

Why wouldn't you include this stock in your portfolio? The only reason perhaps could be expensive valuations.

You see, when Tanushree first recommended this stock, it was too expensive for an outright buy. So she had to ask her subscribers to wait for the stock to fall a bit.

But now, the stock has fallen and it's a 'Buy'.

I think it is one of those stocks that offers safety as well as growth. Therefore, it is a part of Tanushree's Permanent Wealth Blueprint.

You can access the Permanent Wealth Blueprint here...

Chart of the Day

As I mentioned earlier, the company boasts of sound financials. This includes high profitability (RoE consistently above 20%), a debt-free balance sheet, and consistently positive free cash flow. Going forward, I believe it will remain just as strong as it is today.

You can see why in today's chart.

A Robust Business Model Translates into Strong Financials

Net sales and net profit grew at 15% and 13% annually in the last decade. Free cash flow grew at 22% annually. The strong cash flow generation gives us greater confidence in the business.

Such a strong financial position provides the company with a lot of flexibility to expand its operations.

It's not surprising that such a stock is part of Tanushree's Permanent Wealth Blueprint.

Just click here to access the Permanent Wealth Blueprint.

Regards,

Sarvajeet Bodas
Sarvajeet Bodas
Research Analyst, Smart Money Secrets

PS: Dear reader, Sarvajeet has written to you about this stock today because he believes Tanushree is absolutely right to call it a permanent wealth opportunity. It is precisely stocks such as these that can launch your journey to 'Permanent Wealth'. Over the last few months, Tanushree has developed a new and exciting blueprint for building permanent wealth! The Permanent Wealth Blueprint contains 3 stocks to launch your journey to permanent wealth. You have till midnight, tonight, to get full details on Tanushree Banerjee's 3 Permanent Wealth Stocks.

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