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- Best Low Price Shares to Buy for Long Term
Best Low Price Shares to Buy for Long Term
Low price shares are basically penny stocks, which trade between a current market price of Rs 1 to Rs 100.
These low price shares are usually not known to a larger group of investors because there's not much information available about them.
Even if you manage to get some information, these companies have very little trading volume, volatile price swings and are speculative in nature.
But don't let all this drive you away from low price shares. If selected carefully, these low price stocks can be the 'X' factor for your portfolio.
Low price stocks come in with higher risks, but they offer potentially higher rewards.
You just need to filter out the fundamentally strong low price shares and hold on to them for the long term.
If you're looking for the best low price shares to buy for the long term, apply the following fundamental filters.
- Last 10-years sales and profit growth greater that 10%
- Cash on the books greater than total debt
- Current ratio greater than 1. Ideally greater than 2
- Return on Equity greater than 12%
Here are some don't when it comes to investing in low price shares:
- Don't invest in a low price stock which is loss-making
- Don't invest in a low price stock with promoter holding less than 50%
- Don't invest in a low price stock that doesn't pay dividends
This step-by-step process will get you started in your hunt for the best low price shares to buy for long term.
You can also checkout our playlist on Penny Stocks on Equitymaster's YouTube channel.
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5 Penny Stocks that Rallied 1,000% in 2022. How are They Set Up for 2023?
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My Top Penny Stocks in this Market
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5 Fundamentally Strong Stocks Trading Near 52-Week Lows. Do they Have the Potential to Rebound?
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Despite the positive sentiment in the market, these five smallcaps are trading at their yearly low. Find out why.
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5 Penny Stocks Set to Grow Dramatically in 2023. Add them to Your Watchlist
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The Top 4 High Book Value Penny Stocks to Add to Your Watchlist
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8 Penny Stocks with Exceptionally High Promoter Holding
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While high promoter holding is a good thing, there can be rare cases where penny stock promoters use misleading information about the actual valuation.
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5 Fundamentally Solid Companies Near 52 Week Lows. Has the Market Got it Wrong?
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Amid the current volatility, many stocks have hit their 52-week lows, despite strong fundamentals.
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How to Pick Penny Stocks With 10x Potential
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Choose the right penny stocks that can potentially deliver 10x returns even when the market is volatile.
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Diwali to Diwali: Top Performing Penny Stocks of 2021
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These penny stocks delivered multibagger returns of up to 30 times since last Diwali.
FAQs
What are penny stocks?
Penny stocks are shares of listed companies priced below Rs 100. In the US market, these stocks trade for less than a dollar i.e. for pennies. Hence the name.
Penny stocks have the potential for above-average returns. However, they are extremely risky. Therefore, investing in them requires care and caution.
How should you go about investing in penny stocks?
Penny stocks are usually issued by new or very small companies. These companies often don't have a proven track record, which is why their shares are sold for so little.
Larger, more established companies may also have stocks trading under Rs 100 when they are facing financial trouble or approaching bankruptcy.
Since they carry a high amount of risk, one must have a proper strategy in place.
Check out our framework for investing in penny stocks. This strategy is the easiest one to make money from penny stocks.
Which are the top multibagger penny stocks in India right now?
As per Equitymaster's Stock Screener, here is a list of the top multibagger penny stocks in India right now...
These companies have been ranked as per the returns they have given shareholders in the last 3 years.
Remember, it's not easy to identify future multibagger stocks, but if you do it carefully and with due diligence, you can find high growth companies which can turn out to become future multibaggers.
Which are the best long-term stocks?
The best long-term stocks are those that compound wealth that could last you for generations.
For this, you need to buy great companies at a reasonable price and hold on to them 'forever'.
Asian Paints is a classic example that embodies the true spirit of a 'Forever Stock'. Had anyone invested Rs 500 in the company when it went public in 1982, the value of the holding would be as much as Rs 10 m today.
To know about more such companies, check out our recommendation service - Forever Stocks.
ABOUT EQUITYMASTER
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