Ignore what your stock broker, your friend and the "talking heads" on TV tell you, and...
surged 28 times... 33 times...
And one even jumped 53 times!
Blue-chips, or Safe Stocks as they are often called, are known for providing stability and consistent returns.
But please take a look at this now...
These are just some of the returns that members of a very privileged group have made - and consistently make - from some of the market's safest stocks.
And I'm going to reveal all about this group in the next few minutes... including their recent stock picks.
In fact, of all the stocks that were recommended for purchase to this group, 82.5% hit their mark.
I know your initial reaction is probably that this number is too good to be true. To tell you the truth, I felt exactly the same way when I saw the report on the track record.
But I even got it cross checked by an independent auditor. And as it turned out, it's absolutely true.
I will shortly share with you complete details about the track record, including the stock picks that did not work out.
But before that, there's something else you should know...
You see, if you're like most other investors out there, you too were made to believe that there are basically only two kinds of stocks:
1) Safe low-return stocksIf you wanted bigger returns, you were told that there's no other option but to invest in stocks that involve at least some amount of risk.
Or else, just settle for the dividends and small returns that the safe stocks gave you.
What if I told you now that Safe Stocks can make you triple-digit returns also?
And how big could these returns possibly be?
Well, let me give you 3 examples...
We recommended L&T on 5th November, 2002 when it was selling at Rs 48*. And when we gave a SELL on it in March of this year, it had risen a whopping 3,275%.
Similarly, Voltas too, which we recommended on 30th June, 2003 returned 2,840% until August of this year when we gave a SELL on it.
Then we recommended Titan on 21st July, 2003 when it was selling at Rs 67*. Today the same stock is priced at Rs 3,601.
An increase of 5,275%... and we havenít recommended a SELL on Titan yet.
(*Recommendation prices have been adjusted for bonuses and stock splits over the years)
don't happen every time
But you can make at least double your money from safe stocks consistently, if not more.
You already saw 3 stocks before that generated 100% or more returns in less than 2 years.
Apart from those...
And there are many, MANY more stocks like these.
So why settle for just tiny returns and dividends, when you can make 100% or more from SAFE large cap stocks easily?
All you need to do is hold the stocks for 2-3 years...
Oh and, you'll also need to do one other thing that most investors don't!
What I'm about to tell you now will be in complete contradiction to what you hear usually.
You won't hear this from your investor friend, your stock broker or your fund manager. And you also won't read about it in any financial magazine or see it on television investing news.
Ever since you got into stocks, you must have had many people tell you that you should always see what the other investors are doing and take cues!
In other words... if a lot of investors are buying a stock, you can safely assume the stock is a good one and buy it.
And if a lot of investors are selling a certain stock, you can take it that the stock has turned bad and sell it away or refrain from buying it.
But while you may think that you'll become rich investing in stocks this way, the truth is you won't get anywhere doing what everybody else is doing.
On the contrary, you'll just end up like most of the investors who are forced to settle for meagre returns and never make the kind of money they want from stocks.
You have to do what most other investors won't do
Invest in companies that everybody else is avoiding.
Don't get me wrong - I'm not telling you to invest in bad stocks. People are obviously avoiding them for a reason.
But sometimes, even perfectly good stocks get ignored due to some misconceptions. Those are the companies I'm telling you to go after.
Let me explain...
See, we all know there are no better companies than the large caps when it comes to stability.
Large caps are all well-established companies with stable earnings and no extensive liabilities.
don't know about large caps. . .
There's a strong belief among investors that large caps are virtually immune to any and all kinds of problems.
That's not really the case.
The truth is that even large cap stocks go through hardships from time to time.
The reasons could be anything like:
This is when you need to act fast and grab the stock.
When you grab good companies for cheap, doubling or tripling your money with them becomes all the more easy.
Just see these 2 examples. . .
Example #1: Indian Hotels
This was a stock recommended at the height of the global crisis in November 2008.
High inflation, cost pressures, liquidity crisis and regulations concerning the real estate sector had made funding difficult. This coupled with unrealistically high land prices and government red tape was resulting in hotel projects taking longer to fructify.
The slowdown had also led to sharp declines in tourist traffic and room rates, and that too was impacting the company.
But we kept the long term picture in mind and expected the crisis to not have any material impact in the company's future over a 3 to 5 year period.
And the stock is up 93% since then.
Example #2: GSK Consumer
We recommended GSK Consumer in February 2009 when the Indian malted beverage market was seeing stiff competition from new entrants like Dabur and Hindustan Unilever.
In the midst of all this, GSK initiated a 7% price hike in its flagship brand 'Horlicks'. It also leveraged its brand power to launch new variants.
This firmed up our confidence in the company retaining its 70% market share. Plans to introduce products from its global parent's portfolio in oral care, energy drink and other segments over the next 3 to 4 years was the additional sweetener.
So we maintained that despite competition GSK Consumer would be able to leverage its brand power to emerge stronger and improve returns to shareholders.
The stock is up 270% since then.
Regardless of what everybody says...
We believe the main reason why people avoid large caps is because they aren't aware of this unique, time-tested, highly effective way of making BIG returns from large cap stocks.
Why else would someone say no to triple-digit returns from safe large cap stocks?
Of course, others with vested interests (you know who) also force investors to believe that large caps cannot generate big returns...
Plus, ordinary investors usually won't have the resources to execute this method properly.
But whatever their reason for avoiding large caps, this gives YOU an excellent opportunity to multiply your money safely.
Since you're investing in large cap stocks using this approach, you need not feel that you're taking on too much risk.
Agreed that no investment is 100% guaranteed. Not even large caps!
But with the big companies, you can be confident that they will not disappear overnight and take your entire investment with them.
Moreover, this approach is based on the time-tested investing principle of being greedy when others are fearful, and fearful when others are greedy.
So if done correctly, it is certain to produce profitable results... as has been proved already in the examples presented to you.
will be a good buy
You need to know exactly which big companies are likely to recover faster and make bigger returns for you... and of course, when is the right time to buy them.
And this is where Equitymaster comes in...
You see, we've got this Premium research service called StockSelect.
If you're looking at building a portfolio of blue-chip stocks that could deliver steady returns over the long term, then StockSelect is the service you need to be signed up for.StockSelect tells you which big companies are a "must-have" for your portfolio... and more importantly, it notifies you as and when they're available at attractive valuations.
It works on a simple principle - buying great companies at bargain prices and making staggering returns on them when the company grows rapidly in a few years.
So with StockSelect, you not only earn consistent dividends but also big returns from the large caps stocks we recommend.
Take Tata Steel for instance...
We recommended Tata Steel in December 2008, when the stock was trading a mammoth 80% lower than its 52-week highs!
The stock's underperformance then could be attributed to its balance sheet that had been loaded with debt on account of the leveraged buyout of Corus.
While we saw the concerns as being valid, we knew those were far too exaggerated. Our calculations showed that even if the company's earnings were to fall by 50%, there would still be enough cash flow for it to pay for its financial expenses on the debt.
So we remained confident that the company will come out of the downturn rather unscathed.
And the stock is up 269% since then.
Great companies always recover when the storm passes.
So if you buy the blue-chip stocks at the right time, you could easily make attractive returns over 2-3 years.
We're not stock brokers. We don't gain anything even if you buy the stocks we recommend.
However, our credibility... and more importantly, our income... depend on whether or not the stocks we recommend make you money.
Because if you don't make money from our recommendations, you will simply not renew your subscriptions. Furthermore, you'll also tell your friends not to sign up for our services.
We don't want that, and that's why we take extreme care while finalizing the stocks to recommend.
And there's one other thing...
I bet you too, like numerous other investors, were taken aback by the 'Satyam' fiasco and started wondering how many more companies of that sort are there in India.
Well, guess what?
Because we meet various companies face to face, do our due diligence and continuously track our recommendations... we reduce the risk of a Satyam like situation emerging in stocks that we recommend.
Here's what one subscriber had to say about our research...
more often than not . . .
You see, most investors take the return on stock investment to be the key yardstick while deciding whether or not to buy a stock.
But legendary investors like Benjamin Graham and Warren Buffett have always maintained that 'evaluation of risks' should be given as much importance as 'estimation of returns'.
It is in this direction that our research team has developed the Equitymaster Risk Matrix or ERM which helps quantify the risk attached to a stock. The ERM is an integral part of our stock selection process.
Look, you probably understand that no two companies have the same degree of risk associated with them. Even if they operate in the same sector, their business dynamics, managements and valuations are different.
That's why it is important to evaluate the risk involved in each case separately...
And the ERM is designed just for that!
The ERM is a matrix designed to evaluate the key risks attached to a business, it financial history and its management. It ranks not just the company but also the sector in which it operates based on its relative risk profile.
When markets were at their nervous best in late 2008, our Buy recommendations on ACC, Tata Steel, Corporation Bank and Maruti Suzuki were backed by our confidence in the low risk profile of these companies as shown by ERM.
As expected, these stocks went on to multiply our subscribers' wealth several times.
Again, it is the same ERM that we rely on to quantify the risks we believe subscribers need to be cautioned about while recommending a 'Sell'.
Given the complex operating environment that Indian business are aspiring to be a part of, we believe the ERM can offer immense value to investors seeking to maximize their long term returns by without taking on too much risk.
Sometimes we make mistakes too
Like I said before, StockSelect has an accuracy rate of 82.5%.
That means for every 6 large caps stocks we recommend through StockSelect, 5 hit their target.
So there's 1 stock out of every 6 that does not perform as expected.
Now, there's no doubt that we recommend a stock only when it meets all the required parameters.
But sometimes... despite having all those valid reasons for recommending the stocks... the assumptions we make turn out to be incorrect.
For example, here are 2 stocks that didn't do like we expected them to...
The Indian textile industry had just broken the shackles of the quota regime. The government's benign subsidized loan scheme for this sector made it more appealing. What better time to recommend one of the most established names in Indian textile manufacturing and retailing? This was the thought behind our 'HOLD' recommendation on Raymond way back in September 2006.
The company then had a reasonable debt to equity of 0.7 times and net profit margin of 15% which was one of the best in the sector. Since then the stock corrected by 67% (on a point to point basis) until we recommended a Sell on it in September 2008.
Despite having recovered India's largest and technologically most advanced manuthe stock is down 16% from the price at which we recommended a HOLD.
While our judgment of the management's ability to takeoff the joint ventures with foreign partners was faulty, forex losses on sales as well as external borrowings aggravated the matter.
Economic recovery in the developed markets too did not shape up too well over the last two years. The management still remains quite unsure of where its focus lies.
2) Punj Lloyd:
We had recommended Punj Lloyd in 2008 backed by our optimistic assumption about the company consolidating its position as the second largest engineering and construction player in India. Its foray into the oil and gas pipeline business was especially encouraging.
We expected the company would grow due to a strong demand from sectors like pipelines and terminals, aggressive forays into newer segments, and execution of large scale domestic and international projects.
But unfortunately execution delays and cost overruns marred the performance of the company. Our attempts to meet the management to get some clarity on the future direction of the business were also in vain.
In addition to this, after some change in the senior management, the new members seem very reluctant to share the long term outlook for the company. Finally we asked our subscribers to stay away from the stock.
Meanwhile the stock never came back to the recommended levels and the companyís problems are far from being resolved. And today, the stock is down 65% from initial recommended levels.
The truth is, despite making all the efforts to be as accurate as possible, there will always be factors that we can't control.
But all said and done, you can rest assured that when you receive a research note from us, it is our honest opinion about the stock - based on certain time-tested criteria and assumptions.
52 Blue-chip Recommendations in a year
Every Friday, we'll send you a StockSelect report recommending a Buy/Hold/Sell on one large cap company.
In this report, we will provide you detailed and extensive analysis of the company along with our expert opinions.
Even though large cap companies are a dime a dozen, it's still important to know which stocks are the right stocks and what is the right price and time to buy these stocks.
StockSelect tells you just that!
Consider the case of Bharat Forge...
Bharat Forge is one of India's largest and technologically most advanced manufacturers of Forged & Machined components...
We recommended this stock in April 2009. The company was then facing serious issue on the balance sheet front as it had loaded the same with debt.
Our view was that the company was soon to get a return on the expansion it made using this debt. We expected the company's domestic operations as well as foray into other segments to minimize the impact that sharply lower exports were having on its overall business.
While we agreed that the company was no doubt struggling to grow at rates that it has managed to do in the past, we thought the fall in stock price was much exaggerated.
And the stock is up 251% since we recommended it.
By subscribing to StockSelect, you'll be notified of 52 exciting Blue-chip Buy/Sell/Hold opportunities at the right time.
You can then explore the opportunities further if you like, and pick a final list of blue-chip stocks to invest in.
In addition to these, we also release special reports from time to time on attractive large caps opportunities.
Fast action takers will benefit from these reports also.
The Companies Recommended. . .
And we don't just recommend some companies and forget about them.
At the end of each quarter we review all the stocks that we recommended during the six month period prior to that.
We provide subscribers our latest analysis on all those recommendations... and whether we maintain our views on them or have changed the same.
We illustrate in detail our reasons for maintaining the stance or change in stance, and finally summarize all of those into a table as you can see below:
Apart from these quarterly reviews, another thing that forms part of the "ongoing coverage" is the Quarterly Result Analysis that we write for all companies under coverage... wherein we also mention whether the results are in line with our estimates or not, and whether we maintain our view on the stock or not.
Given that the markets are likely to remain bumpy for some more time, this kind of information can come in very handy.
Here's what one subscriber had to say about our review reports...
These are articles and reports that are available to our premium subscribers only.
We release over 800 of them every year.
You might understand that there a lot of factors influencing the stock price, most of which need to be monitored regularly. So from time to time, we release instant reports and updates on various companies.
These articles include excerpts of management meetings, extracts of conference calls, updates on the happenings in a company and our personal views on it, and so on.
This is all "unadulterated" information and it will serve as a valuable input for your investment decision.
The Portfolio Tracker is an online utility that helps you track all your equity and mutual fund investments in one place! It's online, and is available to you 24 hrs a day.
You just have to enter the details of stocks or mutual funds owned by you ONCE... and Portfolio Tracker will show you what your entire portfolio is worth AT THAT MOMENT anytime you log into it.
What makes the Portfolio Tracker the indispensable tool that it is are the intelligent reports that come along with it.
You see, we at Equitymaster have spent a considerable amount of time trying to understand how the fund managers who invest for the long-term track and review their portfolios.
And it is the relevant learnings from this exercise that we have translated into reports.
In a nutshell, these reports help you answer questions like -
The Portfolio Tracker usually costs Rs 330 for a year. But by subscribing to StockSelect, you get it absolutely FREE.
Our Recently Released Asset Allocation Guide
Our experience shows us that a majority of new investors fall into two main categories:
Therefore our intention through this guide is to help you allocate your investments properly... to not just give you a chance of maximizing your stock market returns but also keep the risk involved to a minimum.
So after reading this guide, you will FINALLY know how to distribute your investments between large, mid and small caps stock... apart from a lot of other things.
And this guide, too, will be available to you FREE when you subscribe to StockSelect.
Be among the first to get it
It helps you understand the long-term trends associated with each company and sector, and thereby plan your investments intelligently.
For each of the 200 selected companies, the Yearbook provides a full page of financial and other important data, conveniently tabulated under relevant headings with a host of important ratios.
And apart from this, you also have detailed notes on over 20 sectors, the Indian economy, mutual funds and a lot more.
Simply put, this Yearbook offers accurate, unbiased and detailed data on leading companies, sectors and economy all in one place... and there's no other resource that offers all this information together.
That's why it's something every investor must have.
The Yearbook costs Rs 750 to buy separately. But if you subscribe to Equitymaster through this offer, you will get the PDF version of this Yearbook absolutely FREE.
The Daily Reckoning . . .
Are you someone who's interested in monitoring or even investing in the global markets?
Now you can read what knowledgeable investors across the globe read every single day for global market analysis and investment ideas.
Yes, we are delighted to bring you 'The Daily Reckoning', a daily financial e-column by Bill Bonner, Publisher and Editor, and three-time New York Times best-selling author.
The Daily Reckoning is published every day in 3 languages from offices in 6 countries - US, UK, Australia, France, Germany, South Africa.
Now, it's India's turn... and your turn to get it for FREE!
When you subscribe to StockSelect, you automatically get a free subscription to the Daily Reckoning also.
You might be thinking all this would cost a lot, but no!
The price of StockSelect is normally Rs 5,000 per year, which is anyway not much to pay for a service like this.
But for the next few days (till 14th January,2011), you can subscribe to StockSelect for Rs 2,450 only.
At more than half-off!
And, you can sign up at this highly discounted price and test-drive StockSelect for a full 30 days.
If you don't like it, get in touch with us before the 31st day, and we'll refund the full fee you paid. That's a promise!
However, you must act quickly.
This offer will close at 5PM on the 14th of January. And after that, the subscription price of StockSelect will also go back up to the usual Rs 5,000.
Look, StockSelect has an extremely good success rate of 82.5%, and you'll also be investing in the some of the market's safest stocks by subscribing to it.
Plus, you've also got nothing to lose...
If you make use of this offer, you can subscribe to StockSelect at a highly discounted price, and try the service for 30 days without risk.
During this one month, you'll get 4 current issues of StockSelect... plus access to archives of all the previous issues.
After going through the current and past issues, you should have a good idea of whether StockSelect is for you or not.
If you don't like what you see, just let us know before the 31st day and we will refund the entire price - no questions asked.
So you have at least 2 good reasons to sign up for StockSelect NOW:
Chief Executive Officer
P.S.: This offer will close at 5 PM on 14th of January. So sign up before then to get...
P.P.P.S.: Here's what another subscriber has to say...
P.P.P.P.S.: If you have any queries, please do not hesitate to contact us at +91-22-61434055 or Write in to us. We will be delighted to assist you!
*Returns have been calculated as on 1st January 2011 or on the date of Sell Recommendation, whichever is applicable. |
Equitymaster Agora Research Private Limited
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Telephone: 91-22-6143 4055