My Next Small Cap Recommendation Is Practically a 'No Brainer'

Jan 14, 2019

Richa Agarwal, Research analyst

It is not often that one comes across an investing idea that seems too good be true.

At Equitymaster, a few that I recommended (and can instantly recollect) include GMDC (closed with 61% returns in less than a year), Ruchira Papers (closed with 91% returns in less than a year), Kolte Patil Developers Ltd. (closed with 196% returns in four years).

One did not need to be a paper, mining or real estate sector expert to understand the upside potential in these stocks. A basic understanding of finance would have been enough.

With strong balance sheets in their favour and attractive dividends, it did not take much time or forecasting in excel sheets to figure out that these stocks were 'dollars available for 50 cents' (Or a rupee available for 50 paisa).

Amid the small cap rush over last few years, until the correction this year, such opportunities had almost vanished.

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But things have changed.

My next small cap recommendation is an investing idea so simple, that I could illustrate it on the back of a paper napkin.

A Powerful Investment Idea That Passes the 'Crayon Test'

With a strong balance sheet - no debt, attractive dividends, and trading at almost lifetime lows, this investing idea is almost a no brainer.

I'm convinced not just about the upside in the stock, but a strong margin of safety too.

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Apart from attractive valuations, what excites me about the business is the way it's integrating technology to stay relevant and gain market share. The new lines of products and services that it has added are likely to contribute to future growth, along with making the business robust across cycles.

What more, the business has very strong structural tailwinds in its favour.

If you are investing for the long term, this is the perfect 'rebound' stock. In fact, I won't be surprised to see the stock achieve its target price well before the horizon period.

And what's more - I would be happy if this stock corrects after recommendation - I would ask my subscribers to buy more (to bring down the average buying price and enjoy higher gains in the long term).

So make sure you do not miss this investing idea... Watch out for my recommendation tomorrow. If you are not receiving my recommendations, you can subscribe for them here.


Richa Agarwal
Richa Agarwal (Research Analyst)
Editor, Hidden Treasure

PS: Some stocks are so obviously geared for success that one could easily regret missing the boat... don't be that guy. Get the no-brainer stock recommendation by subscribing here.

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